The EU creates a new regulator for the supervision of cryptocurrencies

The EU creates a new regulator for the supervision of cryptocurrencies

The European Union (EU) plans to create a sixth “Anti-Money Laundering Authority” that will be specifically responsible for regulating the cryptocurrency industry.

While the Crypto Asset Markets regulation and the controversial Funds Transfer Regulation have received most of the cryptocurrency industry’s attention, they are only a small part of a larger anti-money laundering (AML) policy package. of the EU that will have significant effects. at all financial institutions.

The EU will further regulate cryptocurrencies

The European Council, the European Commission and the Parliament are creating a new regulatory body for cryptocurrencies that will have authority over the sector.

The European Union is considering a new crypto regulatory organization.

The EU is creating a sixth “Anti-Money Laundering Authority” or AMLD6, which will have direct control over the cryptocurrency sector, according to recent reports.

In July of last year, the European Commission published its proposal for the AMLD6, or Sixth AML/CFT Directive. Last month, the European Council made its version public. It will be discussed by the European Parliament after the current August holidays. The three bodies will begin what are known as trilogues after each has approved its own version of the legislation.

The establishment of an EU-level regulator to combat money laundering is a key component of the new legislation. There appears to be little debate about the need for such a body and its requirement to have direct control over EU-based crypto asset service providers, although legislative bodies are yet to discuss.

AMLD6 would ostensibly be tasked with monitoring crypto service providers, especially those deemed “high risk,” unlike previous anti-money laundering regulations that only provided frameworks for EU nations to collect and share information. Therefore, it is anticipated that the regulator will limit the potential for jurisdictional arbitrage within the zone.

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BTC/USD trades at $24k. Source: TradingView

The following is a description of the new system of a parliamentary briefing:

“EU-level supervision consisting of a hub-and-spoke model, i.e. EU-level supervisor competent for direct supervision of certain financial institutions (FIs), indirect supervision/coordination of the other FIs, and a coordination function to supervise non-financial entities. sector as a first step.

The Markets in Crypto Assets and Funds Transfer laws, which not only apply to crypto business but to all financial institutions in the bloc, will not have the same focus as AMLD6, which will have a different emphasis.

Union has taken a strict approach to cryptocurrencies

The EU has taken a strict approach to crypto laws. The European Parliament recently voted in favor of anti-anonymity regulations that would increase the cost, difficulty, or even impossibility of transactions between wallets and non-hosted exchanges. And even if a bill to ban proof-of-work mining were to be defeated by the legislative body, the European Central Bank still anticipates that such a ban will eventually go through due to environmental concerns.

For the EU, the global organization will mark a significant change. The 2015 and 2018 AML directives, in particular the fourth and fifth, establish requirements for member countries to collect and make available specific data, including such as details about the beneficial owners of corporations.

The duration of the implementation will depend on the negotiations between the European Parliament and the subsequent tripartite dialogues with the commission. It will be years before the regulation is fully implemented, including AMLA staffing. However, there seems to be little doubt about the arrival of such a regulator.

Featured image from Shutterstock, chart from TradingView.com

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