European Union Tightens Regulations on Cryptocurrency Sector
The European Union (EU) has taken a significant step towards tightening regulations on the cryptocurrency sector. In a preliminary agreement, the EU has proposed more stringent controls on digital currency firms, a move that is part of a broader strategy to enhance collaboration among national authorities to combat money laundering. This decision signifies a consolidated effort by EU member states and the European Parliament to tackle fraud and financial crimes more effectively.
Rigorous Controls on Cryptocurrency Sector
The proposed regulations will require all crypto asset service providers to conduct rigorous due diligence on their customers. This includes enhanced due diligence requirements for firms involved in cross-border correspondent relationships. The focus of this agreement is not just limited to digital currency firms; it extends to self-hosted digital wallets, giving users the ability to manage their private keys independently. These wallets have been identified as potential avenues for concealing illicit funds.
Limit on Cash Payments
Further, the EU plans to implement a new limit on cash payments, with a maximum threshold of 10,000 across the union. For cash payments falling between 3,000 and 10,000, entities will be required to verify the source of the funds. This is a significant move aimed at curbing large scale cash transactions that can potentially be used for money laundering.
Next Steps in the Approval Process
The agreement, however, is still pending formal approval from EU states and the European Parliament. The next steps involve finalizing the agreed-upon texts and presenting them to representatives in the EU’s Committee of Permanent Representatives and the European Parliament for their approval. If endorsed, these measures could significantly alter the landscape for digital currency firms operating in the EU.
The EU’s banking watchdog, the EBA, has also issued new guidelines mandating crypto firms to adhere to stringent anti-money laundering and counter-terrorist financing measures. This move aims to integrate crypto firms into the European framework for financial oversight and mitigate risks associated with financial crimes.
This initiative by the EU is an essential part of a comprehensive regulatory package to combat money laundering. The Anti Money Laundering Regulation (AMLR) includes the creation of a single rulebook and sets up a supervisory authority that will also oversee the crypto sector. The deal is part of a larger legislative proposal called the Markets in Crypto-Assets Regulation (MiCA), aiming to strengthen the EU’s fight against money laundering and terrorist financing.
