The European Union (EU) is taking significant steps to regulate the use of virtual digital assets (VDAs) within its borders. The European Banking Authority (EBA) has introduced a new ‘travel rule’ for crypto firms operating in the region. This rule mandates that crypto firms store transaction details on their platforms to prevent money laundering and terror financing through crypto assets.
Under the new guidelines, all crypto firms in the EU are required to disclose information about each transaction, including details of the payers and beneficiaries. Non-compliance with this rule could result in legal action against the business. Exemptions may be granted to firms that provide valid reasons for not adhering to the ‘travel rule.’
Crypto financing businesses are urged to align their policies with EBA’s travel rule, which is already in place for the traditional banking sector. These regulations are set to take effect on December 30 and aim to bring the volatile crypto sector under a solid legal framework to protect investors and maintain financial stability in the EU.
The EBA is working closely with EU policymakers to ensure that the crypto sector is regulated effectively. By implementing these regulations, the EU hopes to create a safer environment for investors while cracking down on criminal activities associated with digital assets. In June, the EBA published final draft technical standards for its Markets in Crypto Assets (MiCA) rules, addressing various issues such as liquidity requirements, stress testing programs, and recovery plans.
The EU approved its MiCA legislation in October 2022, with the goal of safeguarding consumer interests, preventing market manipulation, and combatting financial crimes linked to digital assets. These regulations are part of a broader effort to ensure that the EU remains at the forefront of crypto regulation, setting a standard for other regions to follow.
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