The European Banking Authority (EBA) has taken a significant step to strengthen Anti-Money Laundering (AML) measures by extending Travel Rule guidelines to crypto service providers and their intermediaries.
Starting from December 30, crypto exchanges operating within the European Union (EU) will be required to adhere to Regulation (EU) 2023/1113 (Travel Rule Guidelines). This regulation mandates reporting information on transfers of funds and crypto assets.
As a consequence, crypto-asset service providers (CASPs), defined under MiCAR, will fall under the EU’s Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) regime.
Impact of EU Travel Rules on cryptocurrency exchanges
Once the regulation takes effect, payment service providers (PSPs), intermediary PSPs, crypto-asset service providers (CASPs), and intermediary CASPs will have a two-month grace period to confirm compliance with the new requirements.
“The deadline for competent authorities to assess compliance with the Guidelines will be two months after the translations are published.”
Key provisions include collecting user information for fund or crypto-asset transfers, identifying transactions related to service purchases, and detecting transfers that seem connected.
Furthermore, crypto service providers and intermediaries must disclose their policies on multi-intermediation and cross-border transfers.
Striving for long-term advantage
The EBA recognized that achieving compliance with the EU Travel Rules Guidelines will impose financial strain on crypto exchanges and service providers. Nevertheless, the regulatory agency foresees long-term benefits.
“In the long run, the anticipated benefits of these Guidelines are expected to outweigh potential costs and contribute to enhancing the effectiveness of combating ML/TF.”
Crypto exchanges and service providers currently covered under the EU’s Anti-Money Laundering Directive (AMLD) or a domestic AML/CFT regime “will remain subject to the relevant AML/CFT requirements.”
As European governments tighten regulations on crypto exchanges, crypto protocols are actively pursuing compliance measures.
The Cardano Foundation, collaborating with the Crypto Carbon Ratings Institute (CCRI), has introduced sustainability metrics for the Cardano network to align with the upcoming Markets in Crypto-Assets (MiCA) regulation in the European Union.
The report emphasizes that Cardano operates on a more energy-efficient consensus protocol, consuming substantially less electricity compared to proof-of-work protocols. It includes details such as the annualized electricity consumption, carbon footprint of the Cardano network, and marginal power demand per transaction per second, among other key metrics.
