US Dollar Coin (USDC) stablecoin issuer Circle is responding to proposed changes to European Union (EU) financial crime policies that would affect crypto companies.
In May, the European Banking Authority (EBA) launched a public consultation on amendments that would extend the scope of the EU Money Laundering and Terrorist Financing (ML/TF) Risk Factors Guidelines to crypto asset service providers (CASPs).
The proposed changes are intended to provide standards that will enable providers of crypto asset services to effectively identify and mitigate money laundering and terrorist financing.
The financial watchdog is also introducing industry-specific guidance, citing that CASPs may be at increased risk of financial crimes due to the use of innovative technologies and instant transfer of crypto assets and services with privacy-enhancing features.
In a statement, Circle said it welcomes the guidelines but expresses concerns about three issues.
The company says the use of the term “service providers in the crypto ecosystem” in the proposal is unclear. The stablecoin issuer suggests that the EBA instead use the term “crypto asset service provider” already defined in the EU law on the Markets in Crypto-Assets Regulation (MiCA).
“The broad terminology used could inadvertently include providers of technology and ancillary services such as blockchain analytics, web infrastructure, etc. Such entities are not involved in and have no control over the flow of crypto-assets, creating a limited risk of money laundering of money and the financing of terrorism.”
Circle also says that the use of technology does not necessarily affect ML/TF risks.
“CASPs that facilitate transfers to and from self-hosted wallets should not be classified as higher-risk entities under the guidelines.”
The stablecoin issuer says the guidelines should not cover EU companies that are exempt from the regulatory scope of the MiCA.
“The fact that they are left outside EU regulation indicates that they do not warrant financial, prudential and AML regulation in the EU and therefore should not be subject to these EBA guidelines.”
Don’t miss a single beat – Subscribe to receive email alerts delivered straight to your inbox
Check price action
follow us on TwitterFacebook and Telegram
Surf to the Daily Hodl mix
Generated image: Midjourney