More regulations continue to drive the future of the cryptocurrency space
The European Banking Authority (EBA) has taken a significant step towards strengthening Anti-Money Laundering (AML) efforts by extending Travel Rule guidelines to crypto-asset service providers (CASPs) and their intermediaries operating within the European Union.
The #EBA has just published new guidelines on the information that should accompany transfers of funds and certain crypto assets.
🔗https://t.co/uNykQqOHwb pic.twitter.com/EwA6ZtYm8c
— EU Banking Authority – EBA 🇪🇺 (@EBA_News) July 4, 2024
This move, coming into effect on December 30, 2024, brings crypto transactions under the purview of Regulation (EU) 2023/1113, also known as the Travel Rule guidelines. This regulation mandates that information on transfers of both funds and crypto assets be reported.
The new rules essentially bring CASPs, as defined by the EU’s Markets in Crypto-Assets Regulation (MiCA), under the umbrella of the EU’s existing AML/CFT regime. This means crypto service providers will be subject to the same scrutiny as traditional financial institutions in regard to preventing money laundering and terrorist financing.
Following the December 30 deadline, a two-month grace period will be provided for payment service providers (PSPs), intermediary PSPs, CASPs and intermediary CASPs to implement the new requirements and demonstrate compliance. This includes collecting user information for all transfers, identifying service-related transactions, and detecting suspicious transfers that might be linked.
Crypto service providers and intermediaries will also be required to establish clear policies on multi-intermediation (transactions involving multiple intermediaries) and cross-border transfers.
While acknowledging that achieving compliance with these new guidelines will likely impose financial pressure on crypto exchanges and service providers, the EBA anticipates long-term benefits. The regulatory body emphasizes that “the benefits from these Guidelines are expected to outweigh potential costs,” ultimately contributing to a more effective fight against money laundering and terrorist financing.
The move comes amidst a growing need for stricter regulations in the cryptocurrency space. While the anonymity associated with crypto transactions has its advantages, it also presents a vulnerability for illicit activities. By extending Travel Rule guidelines, the EBA aims to increase transparency and make it more difficult for criminals to exploit the anonymity of crypto transactions.
It’s important to note that crypto exchanges and service providers already subject to the EU’s AMLD (Anti-Money Laundering Directive) or existing domestic AML/CFT regimes will continue to operate under those regulations. The new Travel Rule guidelines essentially expand the scope of AML/CFT regulations to encompass the burgeoning crypto market within the European Union.
Emma Rodriguez is the Proofreader at the Big Blind, with seven years of experience and five years in online gambling. She plays a crucial role in maintaining content quality by ensuring error-free, reader-friendly information about the gambling industry.