France to mandate identity verification for bitcoin account holders

Since the cryptocurrency industry rose to prominence last year, governments have wanted to gain a sense of control over virtual currencies. Well, now governments and law enforcement agencies may possibly have done so.

The latest trend among governments around the world is for legislation and regulation to mandate bitcoin distributors and other platforms to gather the identities of their users prior to establishing an account. This allows the governmental authorities to know who’s using digital currencies.

Finger printFrance has become the latest nation to institute the new rules. The French finance ministry announced (PDF) the initiative Friday that is planned to be fully implemented by the end of the year and will be a requirement for financial institutions.

In addition, the finance ministry said it will be updating its tax rules that will mimic the United States, United Kingdom and other countries. This means that profit from bitcoin sales will be subjected to a capital gains tax. Also, bitcoin and other digital currencies will be classified as assets to make the individual wealthier and thus be subjected to a “fortune tax.”

The purpose of these schemes is to prevent money laundering and illegal financial operations.

“This report shows that even if the existing volumes of virtual currencies are not likely to destabilize the financial system, these unofficial currencies are developing and have risks of illegal or fraudulent use,” said Finance Minister Michel Sapin in a statement.

French bitcoiners have mixed feelings over the new regulations. For instance, Association Bitcoin France president Philippe Rodriguez told CoinDesk that it disagrees on the confirmation on each transaction, but understands the attitudes behind it. Meanwhile, Thomas France, founder of Maison du Bitcoin, told the Wall Street Journal that he supports the new legal framework because it further legitimizes virtual currencies and that cryptocurrency anonymity is just “a myth.”

Earlier this month, the Argentine government announced that it will now require all financial institutions and services to report every single virtual currency transaction because of concerns over money laundering and illicit activities.