The banking regulatory body of the European Union (EU) is amending the regulations by expanding the anti-money laundering rules to include companies operating in the crypto sector.
The new directives issued by the European Banking Authority regarding cryptocurrency companies will become effective starting from December 30th. Let’s see all the details below.
Summary
New guidelines on the use of crypto: changes to EU regulation
As previously announced, the European Banking Authority (EBA) has recently issued direct guidance, modifying the regulation for crypto companies.
Specifically, the EU has defined specific requirements for compliance with anti-money laundering regulations and the fight against terrorist financing.
This initiative extends the scope of existing measures to cryptocurrencies.
In particular, with the aim of harmonizing the approach of crypto-asset service providers (CASP) throughout the European Union in the fight against financial crime, as indicated in an official press release.
The statement emphasizes that the acceleration of crypto-asset transactions and the presence of features that mask the user’s identity increase the risks of illicit practices.
Therefore, the guide invites CASPs to become familiar with these risks and to implement effective measures to mitigate them.
Last year, the European Union finalized legislation on the transfer of funds through digital assets together with the regulatory package Markets in Crypto Assets (MiCA).
Since then, the EBA has issued guidelines on risk-based supervision of CASPs. It is also currently consulting on proposals and guidelines to prevent abuses in cryptocurrency transfers.
This is in accordance with the guidelines of the Financial Action Task Force (FATF), the global supervisory body. Further guidelines regarding the policies and internal controls that CASPs should adopt are also subject to consultation.
The EBA emphasizes the interconnection of the financial sector, extending the new guidelines to other credit and financial institutions that have CASP as clients or are exposed to crypto-assets.
The competent authorities must communicate compliance with the new guidelines within two months from the publication of the official translations of the EU. The guidelines will come into effect on December 30, coinciding with the entry into force of MiCA.
The EU on guidelines for Stablecoin issuers
The European Banking Regulatory Authority recently conducted a public hearing session.
Specifically, this has been done to discuss the proposals of the operational guidelines intended for issuers of stablecoins within the upcoming regulatory framework Markets in Crypto Assets (MiCA).
During the event, officials actively encouraged the audience and industry operators to actively participate in order to contribute to the formulation of appropriate rules.
In the course of 2023, the EU has marked a historic moment by finalizing the first comprehensive framework for regulating cryptocurrencies in one of the main jurisdictions, which will be fully operational in December.
Subsequently, EU regulatory authorities, including the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA), have engaged in in-depth consultations on the rules and guidelines intended for issuers and cryptocurrency companies, as required by MiCA.
The EBA, in particular, has taken on the task of developing a unified set of rules in accordance with MiCA for stablecoin issuers. This is followed by the formulation of the relevant policies to be implemented by the supervisory authorities.
Some proposals from the EBA
During the recent hearing, EBA officials carefully examined the proposed guidelines for Asset-Backed Token (ART) issuers.
Category defined by MiCA as cryptocurrencies that maintain their stability by referring to the value of one or more official currencies or assets.
The hearing focused on the initial proposals of the EBA regarding the internal governance of companies issuing stablecoins. This, along with specific requirements related to management, compliance, remuneration, and disclosure of conflicts of interest.
Isabel Vaillant, Director of Prudential Regulation at EBA, emphasized the importance of dialogue with the public to ensure a positive start to this regulatory process.
With several ongoing consultations and the closing expected at the end of the month, the EBA plans to organize further similar hearings in the near future. The feedback collected during these consultations will be crucial for the definition of the final regulation.
