NewsEuropean Council Reaches Agreement On AML Authority For Monitoring...

European Council Reaches Agreement On AML Authority For Monitoring Crypto Companies

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The European Council has agreed on forming an anti-money laundering (AML) authority to oversee the crypto sector. In an announcement on Wednesday, the European Council shared that the new body will have the authority to supervise financial entities with a high risk factor. That includes crypto companies if they are identified as high-risk.

End of the digital Wild West

MEP Ernest Urtasun is satisfied with the European Council’s agreement. “We are ending the Wild West of an unregulated crypto market and closing major loopholes in European anti-money laundering regulations,” Urtasun said in response on developments.

The new rules do not apply to Peer-to-Peer transactions whose entities do not fall within the scope of the regulations. So when it comes to individuals sending crypto to each other, nothing changes. However, crypto companies will soon have to collect all kinds of information and apply enhanced due diligence when it comes to transactions to proprietary wallets.

‘Good balance between risk prevention and innovation’

If it were up to MEP Ondrej Kovarík, the new regulations cannot come soon enough. “The European Union has reached a preliminary political agreement on the so-called Transfer of Funds Regulation,” he said. “I am convinced that with this we are creating the right balance between mitigating money laundering risks in the crypto sector without hampering innovation,” Kovarík said in response To the new legislation.

The new European law to combat money laundering in the crypto sector was first proposed in July 2021. Ultimately, the goal is to have everything ready and implemented by 2024. The start of supervision by the new supervisory body should begin some time after that. The new body will be the first authority to have the power to monitor money laundering over larger areas across Europe.

Good for the crypto sector?

The big question, of course, is what impact the new regulations will have on the crypto sector. If it’s up to New York-based NYDIG, that impact will be positive. NYDIG published today a study in which it revealed that new regulations often result in price increases for bitcoin. According to the researchers, this is mainly due to the greater degree of certainty that regulations create for the industry.

For the study, NYDIG examined multiple instances of new regulations in just about every continent. Both in the Americas, Europe and Asia, it appears that new regulations generally have a positive effect on the stock price. So in that respect, the new European regulations are good news.

However, the NYDIG research team notes that the exact effect of new regulations on the bitcoin price is difficult to measure. After all, there are more factors that play a role in bitcoin’s price movement. In particular, the macroeconomic conditions we are currently facing seem to be playing a decisive role in the price. All over the world we are seeing record inflation and central banks are responding with tighter monetary policy.

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