Like crypto payments provider Bottle Pay, mining pool Simplecoin and interactive bitcoin faucet Chopcoin are shutting down in light of restrictions imposed by EU anti-money laundering legislation, AMLD5. Simplecoin co-founder Marvin Janssen addressed Telegram users last month saying “We believe in the power of cryptocurrency and its potential. Mining should to be available to anyone and we refuse to jeopardise our users’ privacy.”
Also Read: European AML Directive Pushes Crypto Startup Bottle Pay Out of Business
AMLD5 Goes Into Effect January 2020
AMLD5, the EU’s 5th anti-money laundering directive which entered into force in 2018, will take practical effect January 2020, as member states are obliged to make new policies law by the 10th. The Simplecoin mining pool will be closed as of Jan. 1. The EU directive is already causing other crypto services to shut down as well, due to its restrictive and privacy-invasive nature.
Among the changes AMLD5 brings about are an expanded scope for regulation regarding crypto platforms and wallets, centrally determined obligations for performing AML due diligence, stricter identification requirements for pre-paid card purchases, and the end of anonymity and privacy for bank accounts and safe deposit boxes. This not to mention increased powers for information exchange between authorities.
EU Cracks Down on Crypto, Small Business
As news.Bitcoin.com recently reported, crypto payments provider Bottle Pay has similarly announced a shutdown date for the end of this month. Like Simplecoin and Chopcoin, Bottle Pay maintained that the new regulations are simply too privacy-invasive to bear, stating: “The amount and type of extra personal information we would be required to collect from our users would alter the current user experience so radically, and so negatively, that we are not willing to force this onto our community.”
Dutch-based Simplecoin, a social mining platform which allowed users to save mined hashes and cash them out for a variety of supported cryptocurrencies, cites not only lack of privacy but also bureaucratic licensing fees resultant of AMLD5, as too painful to suffer. The announcement on the Simplecoin website reads:
Simplecoin will become subject to a large range of AML/KYC requirements. It is because under the new Directive, we would be considered a “custodial wallet provider”, a broad definition that will apply to many cryptocurrency operations … We have been searching for solutions for a while, but it has become apparent that there is no way around it.
Co-founder Marvin Janssen related via the Simplecoin official Telegram channel that “It is a very tough situation. Even if we would require KYC, we still need to get a license from the Dutch National Bank or BaFin. It makes everything very painful and expensive … It is sad because we were in the middle of developing a new one-click miner that runs on MacOS, Linux, Windows. No install & zero configuration.”
Janssen told news.Bitcoin.com via Telegram that many Simplecoin users were surprisingly willing to undergo the KYC, which meant a lot to the company, but that the situation is nonetheless too difficult. When asked whether Simplecoin might relocate to a more permissive jurisdiction he noted:
I wish it were that ‘simple’. The Directive mandates that any service considered a ‘custodial wallet provider’, that provides services in the EU complies with these regulations. We are still looking at options but it would require restructuring a lot of our application … Nonetheless, we definitely plan to come back at some point.
Simplecoin users — which Janssen estimates to be about 50,000 — have until Dec. 20 to withdraw remaining balances. The co-founder notes that it’s not only Simplecoin sticking to their principles when it comes to AMLD5, however. “Many have done so already and I think others will follow suit. The first one that comes to mind for me is Faucet Hub. They are also shutting down citing the same fundamental issues. Furthermore, it is not easy to conform to these regulations even if you wanted to.”
We regret to have to inform you that https://t.co/6g2K935K80 will suspend it’s services. Regulatory concerns and force KYC on our users force us to close chop. We will have a grace period of 4 (until 16.12.19) weeks and kindly request you to withdraw any remaining balances.
— Chopcoin.io (@chopcoin) November 17, 2019
https://platform.twitter.com/widgets.js
Christian Grieger, co-founder of Simplecoin with Janssen and also co-founder of Chopcoin, an interactive bitcoin faucet, reiterated the sad nature of the situation, which forced users and fans of the faucet to be left high and dry after a November shutdown announcement. Grieger says Chopcoin has over 300,000 users but just two employees.
He noted further that both Simplecoin and Chopcoin came into success without help from investors, crypto news outlet the Block reported. The case of AMLD5, as with most blanket regulation of crypto, seems to be hitting the ‘little guy’ the hardest. Thanks to the permissionless nature of cryptocurrencies, however, alternatives are always possible and Grieger has other business plans in mind, though he declined to comment on these.
What are your thoughts on AMLD5 and its effects on the industry in the EU? Let us know in the comments section below.
Images courtesy of Shutterstock, fair use.
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