EBA Seeks Stronger Crypto Regulations in New Proposal

On November 24, the European Banking Authority (EBA) released a consultation paper, addressing the need for more robust Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) standards in the crypto industry. This EU agency, responsible for harmonizing banking regulations across the EU, has identified gaps in the current regulatory framework for crypto service providers.

The EBA is now seeking feedback on its proposals, with the window for comments open until February 26. The crux of the EBA’s proposal is to revoke the 2017 Joint European Supervisory Authorities (ESAs) Guidelines under Article 25 of Regulation (EU) 2015/847. This move is designed to refine the handling of fund transfers that lack critical information, streamlining existing procedures within the EU’s regulatory framework.

One of the key points in the EBA’s paper, particularly in its fourth section titled “Preventing the Abuse of Funds and Certain Crypto-Assets Transfers,” focuses on new obligations for Crypto Asset Service Providers (CASPs). Under the proposed rules, CASPs will be required to collect and retain information on self-hosted wallet addresses. This includes ensuring the identification of individuals in crypto asset transfers and verifying that the address is owned or controlled by the CASP’s customer.

A critical aspect of these new rules is the introduction of a threshold for transfers from self-hosted accounts. When the amount exceeds 1,000 euros, the regulations would come into play. However, the EBA has not clarified whether this limit applies to a single transaction, daily totals, or a monthly aggregate.

This development follows the European Parliament’s vote on September 13 to approve the DAC8 directive. The directive, which received 535 votes in favor, aims to give tax authorities greater power to monitor and regulate cryptocurrency transactions across the EU.