The European Banking Authority (EBA) is taking steps towards improving the Anti-Money Laundering and Combatting the Financing of Terrorism (AML/CFT) rules for cryptocurrency providers. In a consultation paper released on November 24, the EBA recognized the need for stronger regulations to ensure compliance with AML/CFT standards within the crypto industry.
Interested parties have until February 26, 2024, to share their feedback on the proposed guidelines. The EBA’s proposals include implementing AML/CFT criteria for payment service providers and crypto asset service providers (CASPs). The aim is to create a more cohesive regulatory framework and encourage interoperability among these entities.
By enhancing the interoperability of their protocols, CASPs would be required to facilitate the seamless transmission of information. Furthermore, the new rules would mandate CASPs to collect and retain information on self-hosted addresses, ensuring the traceability of crypto asset transfers by verifying address ownership or control. The specific frequency of these requirements is not outlined, but they would be triggered for transfers exceeding €1,000 from self-hosted accounts.
If the consultation process proceeds smoothly, the updated guidelines are anticipated to take effect on December 30, 2024. The release of this consultation paper follows another paper issued by the EBA in October, which evaluated the eligibility of management body members and stakeholders in asset-referenced token issuers and CASPs. Back in July, the EBA also urged stablecoin issuers to voluntarily comply with guiding principles related to risk management and consumer protection.
EU’s Focus on Stablecoin Regulations
Additionally, the European Union (EU) has been actively strengthening regulations for stablecoin cryptocurrencies. To address asset-backed and stability risks, the EU is requiring stablecoin issuers to ensure readily monetizable reserves and implement robust liquidity monitoring procedures.
Furthermore, the EU adopted the Eighth Directive on Administrative Cooperation (DAC8). This directive mandates that crypto-asset service providers report specific transaction information about their clients to the tax authorities of EU member states where the clients reside. DAC8 is set to be enforced in 2024.
The European Commission emphasizes the alignment of DAC8’s provisions with the finalized Markets in Crypto-Assets Regulation (MiCA) and the anti-money laundering rules established under the Transfer of Funds Regulation (TFR). MiCA requires cryptocurrency companies and exchanges operating within the EU to obtain licenses, while issuers of stablecoins must maintain appropriate reserves for stability and security.
