In May 2023, the European Regulation on crypto-asset markets, known as MiCA — short for Markets in Crypto-Assets — was published. This European regulation aims to establish uniform rules for cryptocurrency service providers.
This regulation represents an innovation in terms of regulating the use and issuance of virtual currencies. It governs the approval process for cryptocurrency service providers, enhances trust in the market, and clarifies the competencies of authorities operating in this sphere.
MiCA applies to any natural or legal person providing crypto-asset services within the Union. Crypto-asset services include the custody and management of crypto assets, management of a trading platform, exchange of crypto-assets for funds or other crypto-assets, virtual currency advisory services, portfolio management, etc.
Although not the main focus of its regulation, MiCA also establishes several requirements related to anti-money laundering (AML) efforts. It is important to remember that cryptocurrency service providers are also subject to AML regulations.
One of the key requirements is the need to have a risk assessment framework for money laundering and terrorist financing. This must be accompanied by internal control mechanisms, as well as policies and procedures to detect risks of money laundering and terrorist financing.
This element is fundamental, as it will be one of the criteria considered by the competent authorities in each country when authorizing the operation of cryptocurrency service providers. Furthermore, failure to comply with this requirement after authorization may result in the revocation of the license.
Another requirement relates to governance provisions concerning the management bodies of service providers. MiCA requires that both the management body and shareholders with qualifying holdings must demonstrate “sufficient integrity” and must not have been convicted of money laundering, terrorist financing, or related crimes affecting their integrity.
This requirement is also reflected in anti-money laundering regulations, where high ethical standards in hiring practices are considered one of the key factors.
Lastly, it is important to note the institutional collaboration and distribution of powers. Each Member State will designate a competent authority to approve or deny license applications — in Spain, this will be the CNMV and the Bank of Spain. To exercise the powers granted to these authorities by the regulation, collaboration with other authorities is required, particularly those responsible for anti-money laundering and counter-terrorist financing.
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