The European Banking Authority (EBA) wants its rules on money laundering and terrorist financing risk factors to be expanded to include “crypto-assets service providers.” According to the European Union’s financial regulator, these guidelines should include warnings against transactions employing self-hosted cryptocurrency addresses and cryptocurrency service providers that are not protected by the upcoming MiCA legislation.
Incorporating CASPs into the regulatory framework
The European Banking Authority (EBA) has recommended revisions to its guidelines in response to concerns about the possible misuse of crypto technology for criminal purposes.
These revisions, which are now open for public comment, are intended to address the risks connected with crypto-asset service providers (CASPs) and their possible involvement in money laundering and terrorist financing (ML/TF) operations.
The EBA recognizes that CASPs, like other credit and financial institutions, are vulnerable to ML/TF risks. CASPs, on the other hand, may face increased risks as a result of variables such as using novel technology, the quick movement of crypto assets around the world, and providing services with privacy-enhancing features.
The EBA intends to include CASPs in the regulatory framework and ensure sufficient procedures are in place to address possible ML/TF problems linked with these organizations by widening the scope of the existing recommendations. Participants in the consultation process are urged to submit feedback on the proposed revisions before the August 31 deadline.
Additional risks at play
There are extra dangers associated with crypto service providers, notably platforms that facilitate the conversion of cryptocurrency into fiat money and persons operating on the “darknet” or engaged in crypto mining activities in high-risk locations, according to the EBA. This action is consistent with a global trend of regulatory agencies recognizing the significance of regulating cryptocurrencies and related activity. The announcement comes less than a week after the European Securities and Markets Authority (ESMA) advised crypto companies to expressly mark cryptocurrencies as unregulated when offering them to investors, in advance of legislation that will clear the crypto landscape of legal ambiguity.