The European Union Parliament recently amended it’s 4th AML to impose new regulations on cryptocurrency Market operating in Europe. According to the new Directive called 5th Anti-Money Laundering Directive(AMLD5) brings the crypto exchanges and custodial wallet provides under the same regulations as the banks and other financial institutions are at present.
However, The AMLD4 put on rework mainly as the reason to develop cryptocurrency regulation providing clarity to its businesses on their anti-money laundering (AML) and counter-terrorism financing (CTF) obligations.
According to recent research done by London based blockchain analysis provider, Elliptic LTD identified a significant proportion of criminal proceeds in bitcoin were being cashed-out through services based in Europe. Moreover, Appropriate AML measures have not complied by not identifying their customers authentically which led to a regulatory void.
What’s new in AMLD5??
The new directive covers two types of Cryptocurrency business,
- Cryptocurrency exchanges – wherein providers indulge in exchange services between virtual and fiat currencies.
- Custodian Wallet Providers – these are the wallet providers where cryptocurrencies can store and withdrawn using private keys.
Shedding light on the new directive, the European Commission clarified,
“The rules will now apply to entities which provide services that in charge of holding, storing and transferring virtual currencies. As well as, These new actors will have to identify their customers and report any suspicious activity to the Financial Intelligence Units.”
5th AMLD instructs the crypto companies based in EU member states to get register with local regulators. It also introduces know-your-customer norms and also holds information on the client’s source of funds.
The amendment also proposes that member states should create a central database of crypto user’s identities and wallet addresses and authorize national Financial Intelligence Units(FIUs) to access the information.
The directive states,“ To combat the risks related to the anonymity, national FIUs should be able to obtain information allowing them to associate virtual currency addresses to the identity of the owner of virtual currency.”
Why crypto players in town are worried??
The members of the European Nation have already started to work on the new directives. Also, This cheesed off the crypto players operating in the EU. And some regional players announced their exit from EU’s jurisdiction too.
One of the crypto derivatives platforms Deribit announced its reposition of its platform. And, It was operated by a Dutch Company to DRB Panama INC, a subsidiary of the Dutch entity.
Citing to the decision the company explained that demanding an extensive amount of information from their current and future customers would leave them red-blooded.
Additionally, Alike Deribit several other crypto service providers like Bottle Pay, Chopcoin have already shut down.
Crypto regulations are needed to provide clarity within the market as no such directive was framed until now.
Boerse Stuttgart’s chief digital officer, DR Ulli Spankowski mentioned,
”Apparently crypto is now not bad and illegal and if the regulator says you can have a license for it, it must be legit,”.
“With 120 institutional clients and an “open relationship” with the chief German financial regulator. BSDEX can now act as a trusted “gateway” for the digital asset class,” he added.