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EBA emphasizes the need for crypto oversight

SwissBorg Raises over E20M01

SwissBorg Raises over E20M01

The European Banking Authority (EBA) is pushing for an expansion of its guidelines on money laundering and terrorist financing risk factors to encompass “crypto-asset service providers.”

The European Union’s financial regulator asserted that these guidelines should incorporate cautions regarding transactions involving self-hosted crypto addresses and crypto service providers not covered by the forthcoming MiCA regulations.

Incorporating CASPs into the regulatory framework

In response to concerns regarding the potential misuse of crypto technologies for illicit purposes, the EBA has released proposed amendments to its guidelines.

These amendments, which are currently open for public comment, aim to address the risks associated with crypto-asset service providers (CASPs) and their potential involvement in money laundering and terrorist financing (ML/TF) activities.

The EBA recognizes that CASPs, similar to other credit and financial institutions, face vulnerabilities in relation to ML/TF risks. However, CASPs may face additional risks due to factors such as utilizing innovative technologies, the rapid movement of crypto assets across the globe, and providing services with privacy-enhancing features.

By broadening the scope of the existing guidelines, the EBA seeks to incorporate CASPs into the regulatory framework and ensure robust measures are in place to address the potential ML/TF concerns associated with these entities. 

Interested parties are encouraged to participate in the consultation process and provide their feedback on the proposed amendments before the August 31 deadline.

Additional risks at play

According to the EBA, there are additional risks linked to crypto service providers, specifically related to platforms that facilitate the conversion of cryptocurrencies into fiat money and individuals operating on the “darknet” or engaged in crypto mining activities in high-risk jurisdictions.

This move aligns with the global trend of regulatory bodies recognizing the importance of regulating cryptocurrencies and related activities.

The release comes less than a week after the European Securities and Markets Authority (ESMA) urged cryptocurrency companies to explicitly label cryptocurrencies as unregulated when offered to investors, ahead of regulations which are set to bring the crypto landscape out of regulatory ambiguity.

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