The EU will strengthen its control over cryptocurrency assets and transactions
The European Commission announced a new proposal to expand anti-money laundering and counter-terrorism financing (AML/CFT) rules to the crypto industry because currently, only certain types of crypto-asset service providers are subject to these rules. In addition, the proposal also proposes to establish an EU-level Anti-Money Laundering Authority (AMLA) agency to strengthen the control of cryptocurrency assets including Bitcoin.
The European Commission stated that this new proposal will ensure the full traceability of the transfer of crypto assets such as Bitcoin and will allow the prevention and detection of their possible use in money laundering or terrorist financing. Earlier, the British police announced that they had seized approximately $408 million worth of cryptocurrency as part of a money-laundering investigation. I believe that as the EU and other regions tighten the control of cryptocurrency assets, there will be similar moves in the future.
At present, many changes are more about using existing laws and regulations to make specific references to cryptocurrency assets without making too many changes. However, there are also some noteworthy additions, such as prohibiting the provision of anonymous cryptocurrency wallets to users, requiring that the transfer of encrypted assets can be individually identified, and recording the initiator and beneficiary address identifiers on the distributed ledger. At the same time, it also stipulates that as long as the transaction of the encrypted asset service provider involves traditional wire transfer or the transfer of encrypted assets, the relevant regulations will also apply.
The new proposal also needs to be approved by the EU member states and the European Parliament. This process takes about two years. The anti-money laundering agency to be established will start to operate in 2024 and will coordinate regulatory agencies in various countries to ensure that all countries’ transactions comply with standards and avoid illegal cross-border capital flows.