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The Czech Republic Is Doubling Down On Crypto Regulations

12 August 2019 14:44, UTC
The Czech Republic Is Doubling Down On Crypto Regulations
By Denis Goncharenko

According to reports from a local news outlet, the Czech Republic is planning to introduce guidelines and restrictions on the cryptocurrency industry that are not included in the newest EU guidelines for cryptocurrency.

The new additions to the law will be part of the implementation of the Anti-money Laundering regulatory regime. Naturally, this was first kickstarted by recommendations from the EU to its member states, which are now starting to implement them.

This is more than EU guidelines

What’s controversial about the Czech Republic’s guidelines is that they are well beyond what the EU has already suggested. For example, if a crypto exchange fails to register with relevant authorities in the country and starts its operations, it will face a fine of a minimum of half a million euros. The EU guidelines do not support this statement, the fines indicated there are much much lower.

The same media outlet that reported the news also comments that such strict regulations is going to do nothing but disrupt the free market of cryptocurrencies in the Czech Republic. Only a select few companies will be able to afford to comply with such guidelines and very few of them will be local brands, therefore introducing a type of foreign monopoly that nobody wants to find themselves in.

It’s not clear whether the EU will participate in the discussions of potentially toning down the Czech Republic’s proposal, but the fact is that the clock is ticking before January 20, 2020.

How could crypto companies react?

Even though the new regulations may seem over the board, not too many crypto companies should have any issues with complying with the local law. As long as they register and supply customer trading information on a regular basis to the government, they will be able to avoid any unnecessary fines.

It’s not like the license itself is going to cost more, it’s just that the repercussions for avoiding regulations is going to sting much more. Although the government may be looking to prevent any scam operations from being within the country with these regulations, it’s still likely that many fraudsters will try their luck. If jail time and large fines were enough to prevent unlicensed operations in the financial world, there would not be this many scam cases.

Overall, it’s entirely possible that EU countries will classify the Czech Republic’s decision as not an extension of the AML5 framework proposed by the EU, therefore it’s unlikely that other member states will follow this example.

Therefore, all the aspiring crypto startups in the EU can rest easy, knowing that their gathered budget is not going to be insufficient in case of a regulatory fluke.

Image courtesy of DisruptBlock

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