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New EU regulations require crypto exchanges to comply with Travel Rule guidelines and increase AML/CFT measures from December 30. In a significant step to strengthen Anti-Money Laundering (AML) measures, the European Banking Authority (EBA) announced that it will extend its Travel Rules guidelines to crypto service providers and intermediaries.
Crypto exchanges operating in the European Union will be subject to Regulation (EU) 2023/1113 (Travel Rule guidelines), which requires the reporting of information on transfers of funds and crypto assets from 30 December.
As a result, cryptoasset service providers (CASPs) defined under the EU’s Crypto-Asset Markets Regulation (MiCA) will be subject to the EU’s Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regime.
Impact of EU Travel Rules on Crypto Exchanges
Once the regulation comes into force, payment service providers (PSPs), intermediate PSPs, CASPs and intermediate CASPs will receive a two-month buffer period to declare their compliance with the new requirements.
“The deadline for authorities to report whether they have complied 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 whether the transaction is related to the procurement of services, and detecting transfers that appear to be linked.
The EBA acknowledged that complying with EU Travel Rule guidelines would put financial pressure on crypto exchanges and service providers. But the regulatory agency expects overall benefit in the long run.
“Overall, the benefits from these guidelines are expected to exceed the potential costs and these guidelines will contribute to making the fight against ML/TF more effective.”
Crypto exchanges and service providers currently covered by the EU’s Anti-Money Laundering Directive (AMLD) or a domestic AML/CFT regime will continue to be subject to existing AML/CFT requirements.
As European governments tighten crypto exchange activities, crypto protocols are taking a proactive approach to compliance.
The Cardano Foundation, in collaboration with the Crypto Carbon Ratings Institute, has published sustainability indicators for the Cardano network, which will comply with MiCA regulations in the EU.
The report highlights that Cardano operates on a more energy-efficient consensus protocol and consumes significantly less electricity than proof-of-work protocols.
Additionally, other important metrics such as annual electricity consumption and carbon footprint of the Cardano network and marginal power demand per transaction per second are also provided.
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