France has extended Know Your Customer (KYC) requirements to crypto only exchanges this Thursday by an ordinance published in the Official Journal.
Crypto exchanges will now be required to request two forms of identification, as well as a bank account, to serve customers that want to buy even one cent worth of bitcoin.
There will be a six month transition period with these measures coming after there were suggestions terrorists may be using bitcoin for financing.
“Bruno Le Maire has sent a strong message against terrorism, but he has no desire to curb innovation in the blockchain sector,” said a source at the Ministry of Finance cited by local media.
That same source suggested what is now being called double KYC might not be necessary if individuals can be identified digitally through online services like impots.gouv.fr or ameli.fr.
The French Association for the Development of Digital Assets (Adan) said “the measures taken undermine the competitiveness of French industry, by imposing customer identification standards that are more restrictive than other jurisdictions and too restrictive in relation to real risks.”
The French government however wants to also propose these measures at the European level “to obtain harmonization between the countries.”
They further say the focus is terrorism financing and understand “this reinforced identification penalizes [honest] actors.” Thus will be proposing new methods that make it easier to identify ordinary cryptonians while potentially making it harder for bad actors.
This comes about two years after first suggestions arose that fundamentalist elements may be using bitcoin, with Hamas for example asking for donations in bitcoin.
However cryptocurrencies can be mined, so one doesn’t have to go through an intermediary to gain ownership of bitcoin.
Iran for example accounts for some 4% of bitcoin’s hashrate. In Russia it is some 7%. Therefore the effectiveness of these measures is very much in question when it comes to their purported aims especially when considering there was a clear failure to act by the intelligence agencies in France even though they apparently were aware of the individuals and were even warned by other countries.
A more appropriate reaction therefore would be to open an enquiry on why there was such failure, especially considering it appears to repeat far too often in a similar manner.
Because ultimately it is intelligence at the forefront of all this as where the means are concerned, the euro and the dollar are still the chief facilitators of all these bad actors.