Crypto-Assets and AML: Agreement on MiCA; AML Action Plan progresses
Agreement on MiCA:
The EU Council and European Parliament reached provisional agreement on MiCA last night (the proposed EU regulation on markets in crypto-assets) following 3 months of trilogue negotiations.
This comprehensive framework is designed to bring about EU-wide clarity, cohesion and investor protection, and ensure financial stability, by requiring crypto-asset service providers (CASPs) to be authorised in order to operate within the EU. CASPs authorised under MiCA will then be able to passport their services throughout the EU. As with most key areas of EU financial services legislation, sustainability-related disclosures are also envisaged.
Stablecoins were a particular focus area as MiCA progressed – issuers of stablecoins will be subject to liquidity requirements and will need an EU presence. All stablecoins will be subject to supervision by the European Banking Authority.
For the time being, non-fungible tokens (NFTs) are out-of-scope, but the European Commission will look at this again 18 months after MiCA comes into force to see if an NFT-related regime is warranted.
Yesterday’s provisional agreement remains subject to formal approval. Once that happens, and MiCA is published in the Official Journal, we expect it to apply 18 months later (timing remains to be confirmed).
Transfers of Crypto-Assets:
Provisional agreement on MiCA followed quickly after provisional agreement was reached on 29 June on updates to the regulation on information accompanying transfers of funds to capture transfers of crypto-assets. See: EU Council: Anti-money laundering: Provisional agreement reached on transparency of crypto asset transfers.
This forms part of the Commission’s AML Action Plan (for more information that Action Plan, read our earlier briefing here: AML: EU-level supervision and a single rulebook by the end of 2025).
The intention is to require CASPs to collect, and make accessible, certain information about the originator and the beneficiary of crypto-asset transfers operated by them to ensure traceability (known as the ‘travel rule’). CASPs will also be required to implement related appropriate internal policies, procedures and controls. Ultimately, CASPs will become obliged entities for AML/CFT purposes, in line with FATF’s recommendations (with FATF also publishing an update focusing on the ‘travel rule’ this week).
The application date for the updated transfer of funds regulation is expected to be aligned with the MiCA application date.
In a related development, the EU Council confirmed its partial position on the proposal to create a dedicated EU Anti-Money Laundering Authority (AMLA) under the AML Action Plan – it is pushing for the scope of AMLA’s direct supervision powers to be widened, but has not yet agreed on where AMLA will be based.
If you have any questions on MiCA or the AML Action Plan, please contact our market-leading Financial Regulation Group. We will publish further analysis once the regulations are finalised.
“MiCA will better protect Europeans who have invested in these assets, and prevent the misuse of crypto-assets, while being innovation-friendly to maintain the EU’s attractiveness.”
Bruno Le Maire, French Minister for the Economy, Finance and Industrial and Digital Sovereignty