The European Banking Authority (EBA) announced a significant move to support Anti-Money Laundering (AML) measures by expanding Travel Rule guidelines to include crypto service providers and intermediaries. Crypto exchanges operating in the European Union will be subject to Regulation (EU) 2023/1113 (Travel Rule Guidelines) requiring the reporting of information on fund and crypto asset transfers starting December 30.
Legislation in the European Union
As defined in MiCAR, crypto asset service providers (CASPs) will be subject to the EU’s Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) regime. When the regulation comes into effect, payment service providers (PSPs), intermediary PSPs, CASPs, and intermediary CASPs will have a two-month grace period to declare their compliance with the new requirements:
“The deadline for competent authorities to report their compliance with the guidelines will be two months after the translations are published.”
General provisions include collecting user information for fund or crypto asset transfers, determining if the transaction is related to a service purchase, and identifying linked transfers. Additionally, crypto service providers and intermediaries will need to declare their policies on multiple intermediations and cross-border transfers.
What Are the Details?
The EBA acknowledged that complying with the EU Travel Rule Guidelines would financially stress crypto exchanges and service providers. However, the regulatory body foresees overall long-term benefits:
“Overall, the benefits derived from this guideline are expected to outweigh the potential costs, and it is expected to contribute to making AML/CFT efforts more effective.”
Currently, crypto exchanges and service providers under the EU’s Anti-Money Laundering Directive (AMLD) or local AML/CFT regimes will continue to be subject to existing AML/CFT requirements. As European governments strengthen controls over crypto exchange activities, crypto protocols are adopting a proactive approach to compliance.
The Cardano Foundation, in partnership with the Crypto Carbon Ratings Institute (CCRI), has published sustainability indicators for the Cardano network to comply with the upcoming Markets in Crypto-Assets (MiCA) regulation in the European Union. The report highlights that Cardano is working on a more energy-efficient consensus protocol and consumes significantly less electricity compared to proof-of-work protocols. It also provides key metrics, including Cardano network’s total annual electricity consumption and carbon footprint, as well as marginal power demand per transaction per second.