The European Banking Authority (EBA) has recently updated its Travel Rule guidelines to include crypto service providers and intermediaries. This update, outlined in the EU-2023/1113 regulations, requires crypto exchanges in the European Union to adhere to the Travel Rule guidelines starting December 30, 2024. The rule mandates that exchanges report information on funds and crypto asset transfers in an effort to combat money laundering and terrorist financing.
According to the EBA, payment service providers (PSPs), intermediary PSPs, Crypto-Asset Service Providers (CASPs), and intermediary CASPs will have two months to comply with the new guidelines once implemented. The guidelines also require these providers to gather user information to identify the nature of transactions and announce their policies on cross-border transfers. This is aimed at ensuring traceability of asset transfers for investigations and creating a unified regulatory framework within the EU.
The EBA argues that the updated Travel Rule guidelines offer long-term benefits by supporting the EU’s Markets in Crypto-Assets (MiCA) regulation and strengthening efforts to combat money laundering and terrorist financing. The main objective of the guidelines is to make it more difficult to abuse funds and certain crypto-asset transfers for illicit purposes, such as terrorist financing and other financial crimes. The regulator aims to enable authorities to fully trace such transfers to prevent, detect, or investigate money laundering and terrorism financing.
The Travel Rule guideline update coincides with the second phase of the MiCA regulation, which is set to target crypto asset service providers by the end of the year. The first phase of the MiCA regulation, focusing on stablecoins, is already in effect. This phased approach to regulation highlights the EU’s commitment to creating a secure and transparent environment for crypto transactions within the region.
The EBA’s updated Travel Rule guidelines mark a significant step towards enhancing regulatory oversight of crypto exchanges in the EU. By including crypto service providers and intermediaries in the guidelines, the EBA aims to strengthen the fight against money laundering and terrorist financing. Compliance with these regulations will be crucial for ensuring the integrity and security of the EU’s financial system in the digital age.
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