Along with the second part of the Market in Crypto-Assets Regulation (MiCA), another series of measures against money laundering and the financing of terrorism (AML/CFT) will come into force on December 30 in the European Union (EU). These are the new guidelines for the application of the «Travel Rule»«. A set of rules that now apply to bitcoin (BTC) and other cryptocurrency exchanges – legally identified as service providers or CASPs – must be implemented compulsorily. This, following the new guidelines of the European Banking Authority (EBA). As announced by the agency on its official website, under this regulation the platforms that carry out operations with cryptocurrencies will now They will have to collect information from usersidentify whether their transactions are related to the purchase of legal goods and services and monitor the transfers to which they are linked. Additionally, they will have to declare their intermediation and cross-border transfer policies. The objective is to detect any activity that may appear to be illicitThis is a regulation included in the recommendations of the Financial Action Task Force (FATF) that requires exchanges to share information about their clients, although it has been highly questioned within the cryptocurrency ecosystem. for its privacy implications.
The European Banking Authority is among the bodies that will lead market oversight in Europe. The guidelines are already broadly included within MiCA, so the role of this new package is to reaffirm the approved rules and set out the guidelines to be followed for their application. This eliminates the optional range that the «Travel Rule» hadAs explained in the document published by ABE, once the regulation comes into force, cryptocurrency platforms will have for a period of two months to declare their adherence to the new requirements. This will be a transitional period that seeks to facilitate compliance with the standards.
EBA admits difficulties in compliance
At some point in its document, the EBA admits that compliance with the EU guidance on the Travel Rule will subject exchanges to new financial strains. However, they expect the effort to yield a long-term benefit. “The benefits of these guidelines are expected to outweigh the potential costs, and these guidelines are expected to contribute to making the fight against AML/CFT more effective,” the agency notes. It should be noted that the regulations come into force together with the second block of MiCA, aimed at regulating service providers with crypto assets. A situation imposes on these companies the fulfillment of more requirements, including the request for a license in one of the 27 EU countries to be able to continue operating in the region. They must also implement security plans, rules to prevent market abuses and measures against money laundering. All this together with information on their ownership structure, corporate governance and risk management procedures. Given these requirements, it is known that there are a large number of companies that have difficulty adjusting to standards. As BitcoinDynamic reported, many platforms are not yet prepared to comply with MiCA. And even though there are only 6 months left for its entry into force, 70% do not have systems for market and user surveillance required by the Regulation. In this sense, HE notes the existence of much uncertainty for the application of the law. This has been the case both in the first phase of the regulation that came into force on June 30 (dedicated to stablecoins), and for the phase that will be implemented in December with bitcoin exchanges.