European policymakers have been circling around the idea of crypto regulations, but neither the controversial Markets in Crypto Assets regulation (MiCA) nor the Transfer of Funds Regulation gave a definitive answer to what regulations should look like for the emerging sector.
Nevertheless, both regulations happened to receive a massive uproar from the crypto industry, but they were only a small part of a larger package of EU anti-money laundering (AML) policy that will have significant effects on all financial institutions.
Now, The European Council, European Commission, and Parliament gathered around the idea to create a new regulatory body for cryptocurrencies that will oversee the sector.
It turns out that the EU is going full steam ahead in creating a sixth “Anti-Money Laundering Authority,” or AMLD6, which will have direct control over the cryptocurrency sector.
The story of AMLD6
AMLD6 started its journey back in July 2021, when the European Commission published its proposal for the AMLD6. It took European policymakers a whole year to make a public version of the proposal, thanks to the European Council.
However, there is still no clear deadline, since the trialogue between the European Council, European Commission, and Parliament would begin in September.
AMLD6 is a vital part of creating an EU-wide regulator for anti-money laundering, especially in the crypto sector. The new regulator will have direct control over EU-based suppliers of services for crypto assets, according to the public version of the proposal.
AMLD6 would also focus on “high-risk” crypto service providers, mitigating the chances of jurisdictional arbitrage in the European Union and maybe the EEA. Current AML regulations only provided the framework needed for EU nations to gather and share information.
“EU-level supervision consisting of a hub and spoke model – i.e. supervisor at the EU level competent for direct supervision of certain financial institutions (FIs), indirect supervision/coordination of the other FIs, and a coordination role for supervising the non-financial sector as a first step.” EU Parliament representatives noted.
EU’s fight to have strict regulations continue
The EU seems to be following the U.S. SEC in its path to enforce regulations, as EU Parliament voted to create anti-anonymity regulations that would increase the cost, difficulty, or even impossibility of transactions between non-custodial wallets and exchanges. Furthermore, the European Central Bank (ECB) proposed an EU-wide ban on Proof-of-Work projects, but it was rejected. Nevertheless, the ECB pointed out that a ban on PoW projects would happen due to environmental concerns.
The crypto market reacts
Cryptos stopped their uptick shortly after the news, entering a consolidation period and forming new resistance zones. Bitcoin, for example, failed to stay afloat at $25,000 and took a dive below the $24,000 support zone. Currently, the largest and most dominant crypto to date is trading just inches from $24,000, clocking in at $23,959.08 per BTC as of press time.
The rest of the crypto sector copied Bitcoin’s price action, but Ethereum seems to have been gathering strength for an attack on the $2,000 level, as trading volumes increase, while the price consolidates.
Apart from the meme coins Shiba Inu (SHIB), and Dogecoin (DOGE), which made close to 30% weekly price gains, the rest of the sector provided no real surprise, except for tokens like ANKR, which added over 50% to its market capitalization in just seven days.