Along with the second part of the Market in Crypto-Assets Regulation (MiCA), another series of measures against money laundering and the financing of terrorism (AML/CFT) will come into force on December 30 in the European Union (EU).

These are the new guidelines for the application of the “Travel Rule". A set of rules that now apply to bitcoin (BTC) and other cryptocurrency exchanges - legally identified as service providers or CASPs - must now implement compulsorily. This, following the new guidelines of the European Banking Authority (EBA).

As announced the agency on its official site, under this regulation the platforms that carry out operations with cryptocurrencies now will now have to collect information from users , identify whether their transactions are related to the purchase of legal goods and services, and monitor the transfers with which they are linked.    

Additionally, they will have to declare their policies for intermediation and cross-border transfers. The aim is to detect any activity that may appear illicit . 

The guidelines are already generally included in MiCA, so the purpose of this new package is to reaffirm the approved rules and set out the guidelines to be followed for their application. This eliminates the optional status of the “Travel Rule” .

As explained in the document published by ABE, once the regulation comes into force,  cryptocurrency platforms will have a period of two months to declare their adherence to the new requirements. This will be a transition period that seeks to facilitate compliance with the rules. 

EBA admits difficulties in compliance

At one point in its document, the EBA admits that compliance with EU guidance on the Travel Rule will subject exchanges to new financial strains . However, they anticipate that the effort will yield a long-term benefit. 

This is a regulation included in the recommendations of the Financial Action Task Force (FATF) that requires exchanges to share information about their clients, although it has been highly questioned within the cryptocurrency ecosystem due to its implications for privacy .

"The benefits of these guidelines are expected to outweigh the potential costs, and these guidelines are expected to contribute to making the fight against AML/CFT more effective," the agency said.  

It should be noted that the regulation comes into force together with the second block of MiCA , aimed at regulating providers of cryptoasset services. A situation imposes on these companies the fulfillment of more requirements, including the  request for a license in one of the 27 EU countries in order to continue operating in the region.  

They must also implement security plans, rules to prevent market abuse and anti-money laundering measures. All this together with information on their ownership structure, corporate governance and risk management procedures.  

Faced with such demands, it is known that there are a large number of companies that have difficulties in adapting to the standards .  

As CriptoNoticias reported, many platforms are not yet prepared to comply with MiCA. And even though there are only 6 months left until it comes into force, 70% do not have the systems for market and user surveillance required by the Regulation.  

In this regard, there is a lot of uncertainty regarding the application of the law. This has been the case both in the first phase of the regulation that came into force on June 30 (dedicated to stablecoins), and for the phase that will be implemented in December with bitcoin exchanges.