In the wake of terror attacks and unrest in Europe, lawmakers and government officials may adopt measures to enact greater control and oversight of bitcoin.

As part of an ongoing effort to stop the financing the operations of groups linked to terrorism and extremist ideology, the European Commission has discussed various proposals to put more scrutiny on digital currencies and prepaid debit cards.

The European Commission would like to take a closer look at blockchain transactions in an effort to check the identities and backgrounds of those who exchange bitcoin and other virtual currencies. One of the proposals calls for the creation of online tools for reporting suspicious transactions.

During a series of meetings in Strasbourg, members of the Commission discussed the November attacks in Paris, which were carried out by a terror cell affiliated with the Islamic State. In the wake of the attacks, investigators have determined that some of the terrorists used prepaid debit cards to finance their abominable operations.

Anonymous Payments Questioned

One specific proposal addressed by the EU Commission deals with the maximum amount that can be made anonymously with a prepaid debit card. The current threshold of 250 euros could be lowered to 150, about $168 at today’s exchange rate.

It should be noted that prepaid cards in Europe generally offer greater privacy than in the United States. Cards that work on major networks such as Visa, MasterCard and Electron can be purchased up to a certain limit without having to provide an identification document. Likewise, payments made with these cards remain pretty much anonymous.

Bitcoin transactions were included in the Strasbourg discussions due to their perceived anonymity, although it is important to remember that the currency is actually pseudonymous instead of anonymous. Nonetheless, a single user can enhance his or her privacy through multiple wallets and transactions. If anything, bitcoin offers plausible deniability, which could complicate law enforcement investigations.

The Possible Future of Bitcoin in Europe

Prior to the recent proposals made by the European Commission, the European Parliament had already considered regulation of bitcoin and other digital currencies. As previously mentioned, plausible deniability and the pseudonymous nature of bitcoin were major issues with regard to the financing of terrorism activities.

From now until the end of the year, member nations of the European Union will look into methods that could be implemented to spot suspicious transactions in the blockchain. As it stands, every bitcoin transaction can be traced back to its origin; nonetheless, spotting suspicious transactions could be challenging.

It will be a lot easier for European banking regulators to eliminate the anonymous issuance of prepaid debit cards than to develop methods and strategies to reveal the identities of bitcoin wallet holders.

One potential way to reveal identities of bitcoin holders would be to require online exchanges to collect personal information. To this effect, business entities such as Coinbase have gone out of their way to please regulators in terms of security and compliance; these would be the establishments that officials would first go to in the event of an investigation. From there on, investigators would have to pay close attention to the blockchain.

Thus far, major bitcoin ventures have shown willingness to cooperate with future EU proposals; nonetheless, experts are warning that the absence of a blockchain in traditional currency could drive money launderers and terror financiers to stay away from bitcoin and use cold hard cash instead.