EU Policymakers Strike Deal on Anti-Money Laundering Rules for Crypto Firms: What You Need to Know 🚀💰

Crypto Firms Face Stricter Customer Requirements Than Banks, Policy Experts Tell CoinDesk Amid NFTs, DeFi, and Ban on Privacy Tools

Crypto industry cautiously embraces new EU AML rules

The European Parliament and EU Council have recently reached a provisional deal on an anti-money laundering regulatory package that applies to crypto. This agreement has been welcomed by the industry, but some experts argue that it may not be as fair as policymakers claim. Let’s dive into the details and explore what this means for the crypto community.

The Framework: Balancing Security and Equality ⚖️

Under the new provisions, crypto firms will be required to conduct customer due diligence on transactions of €1,000 or more. This move aims to level the playing field between crypto firms and traditional financial institutions by subjecting both to the same anti-money laundering checks.

While the industry mostly supports this framework, concerns have been raised regarding the perceived unequal treatment of crypto firms and financial institutions. Robert Kopitsch, the secretary-general of Blockchain for Europe, argues that the thresholds for crypto asset service providers and other financial institutions are not equal, highlighting a lack of a true level-playing field.

Non-Fungible Tokens (NFTs) and DeFi Not Included 🎨💸

During the legislative session, the EU crypto industry lobbied hard to exclude non-fungible tokens (NFTs) and decentralized finance (DeFi) from the regulatory package. It seems that these assets will remain outside the scope of the new regulations. Tommaso Astazi, head of regulatory affairs at Blockchain for Europe, confirms that the scope of the package will align with the existing Markets in Crypto Assets (MiCA) regulation.

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The exclusion of NFTs and DeFi from the regulatory framework is expected to bring relief to many in the crypto community. However, there were concerns that the package would impose restrictions on crypto anonymizing tools, following the sanctions against Tornado Cash. The final text of the regulations will determine whether discussions on this topic took place and if any restrictions will be imposed.

Same Rules, Different Thresholds: Unacknowledged Technological Advantages? 🔀💡

According to the agreement, all regulated entities, including financial institutions and crypto firms, must apply customer due diligence to transactions above €10,000. However, there is a difference in requirements when it comes to transactions above €1,000. Crypto firms will have to conduct full customer checks on all such transactions, including occasional transactions that occur outside of business relationships.

This distinction in thresholds has raised concerns within the industry. Tommaso Astazi states that this difference showcases a lack of acknowledgement for the technological advantages provided by blockchain technology. Despite this disparity, the alignment of the regulatory scope with MiCA and the rules for gathering information on crypto transfers (TFR) has been ensured, which is a positive development.

What’s Next? 🚀🔮

While the anti-money laundering regulatory package is not final yet, progress has been made, and technical discussions will commence shortly. These discussions will focus on ensuring the text makes sense from a technical perspective. The crypto industry anticipates an intensive review process, with the goal of having the package ready for Parliamentary approval by April.

Once adopted by the Parliament and Council, the regulatory package will be implemented, marking another significant step towards the mainstream adoption and regulation of crypto assets. Stay tuned for more updates as the crypto community continues to evolve in a rapidly changing landscape!

Q&A: Your Questions Answered 🤔❓

Q: How will the new anti-money laundering rules affect crypto users? A: The new rules will require crypto firms to run customer due diligence on transactions of €1,000 or more. This means that users will likely experience increased verification measures and may need to provide additional information when conducting transactions above this threshold.

Q: Will the regulatory package impact the use of non-fungible tokens (NFTs) and decentralized finance (DeFi)? A: The current indications suggest that NFTs and DeFi will remain outside the scope of the regulatory package. However, it’s essential to wait for the final text to confirm if any restrictions or regulations regarding these assets will be introduced.

Q: How do the anti-money laundering measures for crypto firms compare to those for traditional financial institutions? A: While the objective was to create a level-playing field, some experts argue that the thresholds imposed on crypto firms are different from those applied to financial institutions. This distinction has raised concerns about unequal treatment and a potential lack of acknowledgment for the advantages of blockchain technology.

Q: What is the timeline for the implementation of the regulatory package? A: The technical discussions are expected to be intensive, with the aim of having the package ready for Parliamentary approval by April. However, the exact timeline will depend on the review process and the adoption of the package by the Parliament and Council.

Looking Ahead: The Future of Crypto Regulation 🔍📈

The European Union’s anti-money laundering regulatory package marks a significant milestone in the path toward establishing comprehensive rules for the crypto industry. As more jurisdictions develop robust frameworks, the regulatory landscape will continue to evolve, presenting both challenges and opportunities.

It is crucial for industry participants to remain informed and engaged in the regulatory process. Compliance with anti-money laundering regulations is essential for ensuring a secure and sustainable future for cryptocurrencies. As the industry adapts and grows, collaboration between policymakers, industry experts, and users will be vital to strike a balance between security and innovation.

📚 References: – EU Industry Input Really Important for Stablecoin Rulemaking: MICA, EBA Officials Say – 290,000 Korean Public Sector Employees Forced to Declare Crypto Holdings

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