EU Creates New Regulator For Crypto Oversight
The European Union (EU) is planning to create a sixth “Anti-Money Laundering Authority” that will be specifically responsible for regulating the cryptocurrency industry.
While the Markets in Crypto Assets regulation and the contentious Transfer of Funds Regulation have received the majority of attention from the cryptocurrency industry, they are only a small part of a larger package of EU anti-money laundering (AML) policy that will have significant effects on all financial institutions.
EU To Further Regulate Crypto
The European Council, European Commission, and Parliament are creating a new regulatory body for cryptocurrencies that will have authority over the sector.
A new crypto regulating organization is being considered by the European Union.
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 Directive AML/CFT. Last month, the European Council made its version public. It will be discussed by the European Parliament after the current August break. The three bodies will begin what are known as trilogues after each has passed its own version of the legislation.
The establishment of an EU-wide regulator for anti-money laundering is a key component of the new legislation. There appears to be little debate over the necessity of such a body and its requirement to have direct control over EU-based suppliers of services for crypto assets, even though the legislative bodies still need to discuss.
AMLD6 would apparently be entrusted with monitoring crypto service providers, especially those deemed “high-risk,” unlike earlier anti-money laundering regulations that only provided frameworks for EU nations to gather and share information. Therefore, it is anticipated that the regulator will limit the potential for jurisdictional arbitrage inside the zone.
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Following is a description of the new system from a parliamentary briefing:
“EU-level supervision consisting of a hub and spoke model – i.e. supervisor at the EU level competent for direct supervision of certain financial institutions (FIs), indirect supervision/coordination of the other FIs, and a coordination role for supervising the non-financial sector as a first step.”
The Markets in Crypto Assets and Transfer of Funds laws, which do not only apply to the crypto business but to all financial institutions in the block, will not have the same focus as AMLD6, which will have a different emphasis.
Union Has Adopted A Strict Approach To Crypto
The EU has adopted a strict approach to crypto laws. Recently, the European Parliament voted in support of anti-anonymity regulations that would increase the cost, difficulty, or even impossibility of transactions between unhosted wallets and exchanges. And even if a bill to ban Proof-of-Work mining was defeated by the legislative body, the European Central Bank still anticipates that such a ban will eventually take place because of environmental concerns.
For the EU, the global organization will mark a significant change. AML directives from 2015 and 2018—particularly four and five—set requirements for member countries to gather and make available specific data, including as details about the beneficial ownership of corporations.
The duration of implementation will depend on negotiations between the European Parliament and ensuing trilogues with the commission. Years will pass before the regulation is fully implemented, including AMLA’s staffing. However, it appears that there is little question as to the arrival of such a regulator.
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