European Parliament intends to expand regulation for cryptocurrencies industry

The Fifth EU Anti-Money Laundering Directive (AMLD5) no longer meets the more stringent FATF standards, and to harmonize its approach with the international, the European Parliament recommends expanding the concept of cryptocurrencies and the list of related regulated companies in the EU. This is stated in a new report released this week by the organization.

The expert group that presented the report notes a significant growth of token-based platforms and suggests in this regard to introduce “private tokens” as a subcategory of cryptocurrencies.

The document also says that the current regulation does not cover some participants in the cryptocurrency industry, including exchanges that do not support fiat currencies. Such enterprises, the authors of the report say, must also comply with AML (anti-money laundering) requirements.

Additionally, the document draws attention to persons involved in cryptocurrency mining. “There are certainly coins, which exploration doesn’t essentially involve huge hardware farms together with excessive energy expenses. Such coins can be mined on several hardware installations at home, and the installations themselves can belong to anyone, including criminals” – the report says.

Its authors emphasize that new coins are, by definition, “clean”, and if someone, for example, a bank, is ready to convert them into fiat currency or another cryptocurrency asset, the funds received will also be clean.

To solve this problem, the first regulatory step may be the determination of the methods used, and in the future, the adoption of appropriate countermeasures. At the same time, developers of coins and suppliers of non-custodian wallets are proposed to be exempted, since they provide only the technological infrastructure.

The report also states that cryptocurrencies are characterized by increased volatility, as a result of which they carry increased risks for investors. Additional difficulties arise due to the fact that cryptocurrencies hardly fit into the existing financial legislation.

“Presently, EUROPEAN UNION laws and regulations don’t restrict monetary establishments from possessing or getting access to crypto-assets, and also offering related products and services. If financial institutions decide to acquire them and add them to their balance sheets or use for any activity, they can suffer huge losses” – the document says.

The best way to solve this problem may be to exclude cryptocurrencies from the own assets of such institutions, the authors emphasized, urging European regulators to attribute unregulated cryptocurrencies to high-risk assets.

flag

“The tiniest element the EUROPEAN UNION can perform is to expose risk disclosure specifications which will allow buyers and clients to be aware of future risks just before they make investments in these types of crypto assets” – the document says.

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments
0
Would love your thoughts, please comment.x
()
x