EBA Proposes New Rules for Crypto-Asset Providers to Tackle Money Laundering & Terrorism Financing

The European Banking Authority (EBA) has just launched a public consultation on a set of proposed regulations. These rules, aimed at crypto-asset service providers (CASPs), focus on the appointment of a central contact point (CCP) in host Member States to help ensure these businesses comply with local anti-money laundering (AML) and counter-terrorism financing (CFT) regulations.

As the crypto market continues to grow and expand across borders, the need for clear and enforceable regulations becomes even more pressing. Many crypto-asset providers operate in multiple Member States without having a physical presence like a branch, which can make it more challenging for regulators to keep track of their activities and ensure compliance with local laws.

The draft regulatory standards the EBA is now proposing aim to address this challenge by setting out when and how CASPs should appoint a central contact point in each host country where they operate. This CCP will act as a liaison between the CASP and local regulators, helping to ensure that companies meet the rigorous AML and CFT requirements specific to that country.

This proposal is part of a broader effort to ensure that crypto-asset providers are held to the same high standards as traditional financial services. The EBA’s new rules take inspiration from existing regulations that already require electronic money issuers (EMIs) and payment service providers (PSPs) to appoint a central contact point. However, the EBA is adapting these provisions to meet the unique challenges of the crypto-asset industry.

“We recognize that the nature of the crypto industry, with its international reach and decentralized model, presents unique challenges for regulators,” said an EBA spokesperson. “That’s why these updated regulations are designed to ensure that crypto-asset providers operate transparently, with strong safeguards in place to combat money laundering and the financing of terrorism.”

The consultation will remain open until February 4, 2025, and the EBA is inviting all stakeholders to provide feedback on the draft regulations. There will also be a virtual public hearing on January 16, 2024, to discuss the proposed standards in more detail. Those interested in attending can register by January 3, 2024.

These proposed rules are especially timely given the new amendments to EU regulations, with Regulation (EU) 2023/1113 set to come into force on December 30, 2024. This regulation will extend AML/CFT rules to cover crypto-asset service providers, making it even more important for these businesses to have effective compliance mechanisms in place.

By ensuring that crypto-asset providers appoint a central contact point in each host country, the EBA aims to make sure that these businesses are not only able to comply with local laws but also contribute to the EU’s broader efforts to combat financial crime.

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