In a significant step to strengthen Anti-Money Laundering (AML) efforts, the European Banking Authority (EBA) has expanded Travel Rule guidelines to include crypto service providers and their intermediaries.
Beginning December 30, crypto exchanges operating within the European Union must comply with Regulation (EU) 2023/1113 (Travel Rule guidelines), requiring them to report information on transfers of funds and crypto assets.
Source:
EU Banking Authority
This move means that crypto asset service providers (CASPs), as defined in the EU’s Markets in Crypto-Assets Regulation (MiCA), will fall under the EU’s Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) framework.
Impact of EU Travel Rules on Crypto Exchanges:
Upon enforcement, payment service providers (PSPs), intermediary PSPs, CASPs, and intermediary CASPs will have a two-month grace period to demonstrate compliance with the new regulations.
Key provisions include collecting user information for fund or crypto asset transfers, verifying if transactions involve service purchases, and identifying suspicious transfers.
Additionally, crypto service providers and intermediaries must outline policies regarding multi-intermediation and cross-border transfers.
Aiming for Long-Term Benefits:
The EBA recognizes that achieving compliance with EU Travel Rule guidance will strain crypto exchanges and service providers financially. Nevertheless, the regulatory body expects significant long-term benefits.
Crypto exchanges and service providers already subject to the EU’s Anti-Money Laundering Directive (AMLD) or national AML/CFT regulations “will continue to adhere to the applicable AML/CFT requirements.”
Related Developments:
As European governments tighten regulations on crypto exchange operations, crypto protocols are actively pursuing compliance measures.
For instance, the Cardano Foundation, collaborating with the Crypto Carbon Ratings Institute, has introduced sustainability metrics for the Cardano network to align with EU MiCA regulations.
The report highlights Cardano’s energy-efficient consensus protocol, noting its substantially lower electricity consumption compared to proof-of-work protocols.
It provides comprehensive data on the Cardano network’s annualized electricity consumption, carbon footprint, and marginal power demand per transaction per second, among other metrics.
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