The EU creates a new regulator for crypto supervision
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 Markets in Crypto Assets regulation and the controversial funds transfer regulation have received most of the attention from the cryptocurrency industry, they are only a small part of a larger package of EU anti-money laundering (AML) policies 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 cryptocurrency regulatory body that will have authority over the sector.
A new crypto regulatory organization is being considered by the EU.
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 last year, the European Commission published its proposal for AMLD6, or sixth directive AML/CFT. Last month, the European Council published its version. It will be considered by the European Parliament after the current August recess. The three bodies will begin what are known as trilogues after each passes its own version of the legislation.
The establishment of an EU-wide anti-money laundering regulator is a key component of the new legislation. There appears to be little debate about the necessity of such a body and its requirement to have direct control over EU-based crypto-asset service providers, although legislative bodies still need to debate.
AMLD6 will apparently be entrusted with monitoring crypto service providers, especially those deemed “high risk”, unlike previous anti-money laundering provisions that only provided frameworks for EU nations to collect and share information. Therefore, it is expected that the regulator will limit the potential for jurisdictional arbitrage inside the zone.
BTC/USD trades at $24k. Source: TradingView
The following is a description of the new system from a parliamentary briefing:
“Supervision at EU level consisting of a hub and spoke model – i.e. supervisor at EU level with responsibility for direct supervision of certain financial institutions (FIs), indirect supervision/coordination of the other FIs, and a coordination role to lead supervision of the non-financial sector as a first step.”
The crypto-asset markets and transfer of funds laws, which apply not only to the crypto business, but to all financial institutions in the bloc, will not have the same focus as AMLD6, which will have a different weight.
Union has adopted a strict approach to crypto
The EU has adopted a strict approach to crypto laws. Recently, the European Parliament voted to support anti-anonymity regulations that would increase the cost, difficulty or even impossibility of transactions between wallets and non-hosted exchanges. And although a bill to ban Proof-of-Work mining was defeated by the legislative body, the European Central Bank still expects such a ban to take place due to environmental concerns.
For the EU, the global organization will mark a significant change. AML Directives from 2015 and 2018 – specifically four and five – require member states to collect and make available specific data, including details of the beneficial ownership of companies.
The duration of implementation will depend on negotiations between the European Parliament and subsequent trilogues with the Commission. It will take several years before the regulation is fully implemented, including AMLA’s staffing. However, there appears to be little question of the arrival of such a regulator.
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