January 29, 2023

European Parliament prepares to tighten crypto regulation

European Parliament prepares to tighten crypto regulation

EU parliamentary crypto-surveillance report proposes toughening the Fifth European Union Directive on anti-money laundering (AMLD5).

According to the report of the analytical centerThe European Parliament's cryptocurrency laws should be expanded to take into account various future structures and reduce the risks associated with investing in such assets.

The new report suggests moving to stricter international standards based on FATF standards.

Given the high price volatility in the cryptocurrency marketand the incompatibility of digital assets with traditional financial laws, the EU Center has proposed a more transparent approach to financial institutions working with crypto portfolios:

Crypto assets that are not considered financialinstruments, not electronic money, and to avoid any EU financial regulation, they must follow the relevant disclosure requirements so that investors and consumers are aware of the potential risks before transferring funds to these crypto assets.

In addition, the inclusion of digital assets in balance sheetsEU banks can cause huge losses in the event of a significant market drop. The report suggests banning financial institutions from working with cryptocurrency.

As for crypto mining, the document notes that attackers can easily use this industry for illegal activities:

Currently, coins have appeared that do not always require large energy-consuming server resources for mining, and they can be mined using home equipment.

This gives criminals the opportunity to laundermoney, since all recently mined crypto coins are, by definition, “clean”. The EU Parliament must address this deficiency at the legislative level.

Recall recently the European Authority on ValuableSecurities and Markets (ESMA) has allocated more than 1 million euros to study and monitor the fintech industry and cryptocurrency assets. Recall that in 2018, the European Securities and Markets Authority (ESMA) allocated more than 1 million euros to study and monitor the fintech industry and cryptocurrency assets.

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