Level playing field: mission accomplished?
Robert Kopitsch, secretary general of industry advocacy group Blockchain for Europe, expressed doubts. He said, “Despite enthusiastic statements in the media, a level playing field has not been created. “The standards for cryptocurrency asset service providers and other financial institutions are not the same.”
Key provisions and industry concerns
Under the agreed terms, cryptocurrency service providers must:
- Complies with stringent know-your-customer requirements (KYC/AML).
- Implement measures to mitigate risks associated with transactions involving self-hosted wallets and cross-border transfers.
There has been debate in the Legislative Council over whether to include non-fungible tokens (NFTs) and decentralized finance (DeFi) in the regulatory framework. The EU cryptocurrency industry’s lobbying efforts appeared to be successful, temporarily keeping NFTs and DeFi out of immediate regulatory scope.
Various reference points and industry response
Although the Anti-Money Laundering Regulations (AMLR) package has not yet been finalized, key political principles have been agreed. Eero Heinaluoma, the Finnish lawmaker leading the negotiations in the European Parliament, emphasized treating CASPs similarly to credit institutions. The goal is to ensure equal obligations for both.
Concerns are raised because customer due diligence standards differ between cryptocurrency companies, cash exchanges, and financial institutions. While all regulators must apply customer due diligence for transactions exceeding 10,000 euros, financial institutions and cryptocurrency companies must perform full customer verification for transactions exceeding 1,000 euros.
Tommaso Astazi, Head of Regulatory Affairs at Blockchain for Europe, pointed out the following notable differences: Cryptocurrency companies are now required to perform basic know-your-customer (KYC) checks on all non-routine transactions that occur outside of established business relationships. Astazi noted that these changes reflect a departure from current practices in some EU member states.
Despite his reservations, Astazi acknowledged that “as an industry, we can accept the final outcome of the AMLR negotiations as it ensures alignment of regulatory scope and MiCA and TFR.”
Beyond Cryptocurrency: A Broader AML Framework
The regulatory framework aims to prevent illicit financial flows and sanctions evasion across a variety of sectors. The range extends from jewelery and luxury cars to prominent football clubs. AMLR establishes a single rulebook for the EU and introduces a supervisory authority to oversee the cryptocurrency sector.
A key moment in cryptocurrency regulation
As technical discussions on cryptocurrency-related details begin, the industry expects intensive deliberation to take place. Experts such as Vyara Savova of the EU Crypto Initiative expect the package to be ready for parliamentary approval in April. This highlights the increased pace of work by cryptocurrency industry representatives ahead of the upcoming elections.
as a result
The EU’s progress towards comprehensive cryptocurrency regulation marks a pivotal moment for the industry. As negotiations continue, stakeholders will closely monitor the changing environment as they navigate the intersection of traditional financial norms and the innovative cryptocurrency space.
This blog summarizes the key aspects of the new EU AML rules and their impact on the cryptocurrency industry. While concerns persist about regulatory details, the overall direction suggests that Europe’s cryptocurrency markets will become more regulated and transparent. Only time will reveal the effectiveness of these new regulations and their long-term impact on the industry.
These developments could have a big impact on how we interact with cryptocurrencies in the future, so it’s important to stay informed about them. If you have any questions or would like to learn more about this topic, don’t hesitate to contact us.