Regulation
EBA extends Travel Rule to tackle money laundering
THE European Banking Authority (EBA) has expanded its Travel Rule guidelines to include cryptocurrency service providers and intermediaries.
In essence, the move is aimed at combating money laundering and terrorist financing. Starting December 30, 2024, Regulation (EU) 2023/1113 requires cryptocurrency exchanges operating in the European Union to comply with strict reporting rules for transfers of funds and crypto assets. This move, under the EU Markets in Crypto-Assets Regulation (MiCA), subjects crypto-asset service providers to the EU’s anti-money laundering/countering the financing of terrorism (AML/CFT) framework.
Payment Service Providers (PSPs), Intermediary PSPs, Cryptocurrency Service Providers (CASPs) and Intermediary CASPs have a two-month grace period to demonstrate compliance, including collecting user information and identifying transactional purposes.
The EBA acknowledges the potential financial impacts on cryptocurrency exchanges and service providers, but argues that the long-term benefits of the enhanced AML/CFT measures justify the initial costs, as the guidelines are expected to strengthen efforts to combat money laundering and terrorist financing.
A response from blockchain protocols
Meanwhile, in response to increased regulatory oversight in Europe, blockchain protocols are adapting. The Cardano Foundation, in collaboration with the Crypto Carbon Ratings Institute, has developed sustainability metrics for the Cardano network. This initiative ensures compliance with MiCA regulations, highlighting Cardano’s energy-efficient proof-of-stake protocol over energy-intensive proof-of-work alternatives.
The sustainability report details metrics such as annualized electricity consumption, carbon footprint, and marginal energy demand per transaction per second. By adhering to these standards, Cardano aims to promote environmental sustainability in blockchain technology while meeting regulatory requirements.