In a significant development aimed at strengthening measures against money laundering, the European Banking Authority (EBA) has announced the expansion of Travel Rules guidelines to include crypto service providers and their intermediaries.
Starting from December 30, crypto exchanges operating within the European Union will fall under Regulation (EU) 2023/1113 (Travel Rule guidelines), which mandates the reporting of information on transfers involving funds and crypto assets.
As defined by the EU’s Markets in Crypto-Assets Regulation (MiCA), crypto asset service providers (CASPs) will now be subject to the European Union’s Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) framework.
Impact of EU Travel Rules on Crypto Exchanges
Upon enforcement, payment service providers (PSPs), intermediary PSPs, CASPs, and intermediary CASPs will have a two-month grace period to declare their adherence to the new regulatory requirements.
Key provisions include the collection of user information for fund or crypto asset transfers, verification of transaction purposes such as service purchases, and identification of potentially related transfers.
Furthermore, crypto service providers and intermediaries will need to disclose their policies regarding multi-intermediation and cross-border transfers.
Long-Term Objectives
Acknowledging that compliance with EU Travel Rule guidelines will strain the financial resources of crypto exchanges and service providers, the EBA anticipates substantial long-term benefits from these regulatory measures.
Entities currently subject to the EU’s Anti-Money Laundering Directive (AMLD) or domestic AML/CFT regimes will continue to operate under applicable requirements.
In related developments, as European authorities tighten oversight over crypto exchange operations, crypto protocols are proactively aligning with regulatory expectations.
For instance, the Cardano Foundation, in collaboration with the Crypto Carbon Ratings Institute, has introduced sustainability metrics for the Cardano network to comply with EU MiCA regulations.
The report emphasizes Cardano’s adoption of a more energy-efficient consensus protocol compared to proof-of-work systems, resulting in significantly lower energy consumption and carbon footprint.
It provides comprehensive data including annualized electricity usage, carbon footprint, and marginal power demand per transaction per second, underscoring Cardano’s commitment to sustainability.
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