EBA, short for European Banking Authority, has issued certain guidelines. It basically extends the scope of Money Laundering and Terror Financing. These are also referred to as ML and TF respectively. While Circe has welcomed the guidelines, it has sought certain revisions to them for better clarification.
Crypto ventures are under the radar amid an increase in ML.TF activities. Regulators all over the world are aiming to curb illegal activities instead of restricting the operations of crypto platforms. However, not everything is going the way it should.
Circle, for instance, has voiced that guidelines include a broad terminology to cover every provider of technology and ancillary services. Specifically speaking, it has highlighted that the term providers of services in the crypto assets ecosystem does not specify which firms are included and which firms are excluded.
Hence, Circle’s recommendation is to focus on how MiCA covers the category. MiCA, short for Markets in Crypto-Asset Regulation, already exists with a definition for crypto ventures. Also, the Transfer of Funds Regulation can be simultaneously referred to by the authorities. EU legislation has these segments in their respective places and not leveraging their pieces of information would eventually defy the whole purpose of having them in the first place.
It could further lead to the creation of confusion about which firms are valid. Entities under MiCA are not involved in ML and TF, per the response published by Circle, adding that there is a limited risk of both activities happening on the platform.
EBA has covered self-hosted wallets while not realizing that they play an important role in handling the operations of crypto ventures. The platform with integrated self-hosted wallets has been designated as a higher-risk entity. This needs to change so that the platform can go on to serve its customers without any interruption.
Circle has also sought restricting guidelines from extending to those entities that are exempt from the regulatory score of MiCA. Such platforms cannot be designated as higher risk. The reason is that they have already been left out of EU regulations to signal that they do not warrant AML regulation or other aspects.
This is not the first time that Circle has gotten involved with authorities in recommending modifications. Jeremy Allaire, its Chief Executive Officer, was earlier heard testifying before Congress that there is a need to expand the regulatory clarification in the digital asset sphere.
Circle has also responded to the Bank of England, talking about its consultation paper on the digital pound. It was basically about England introducing its CBDC to the community. Circle welcomed the move by saying that stablecoins which are well-regulated and issued privately are fulfilling the needs of the current economy. Research is underway by the Bank of England in this regard – Digital Pound.
Till then, all eyes are on EBA’s response to what Circle has recommended.