AMLA's Bruna Sego warns of risks to EU crypto services post-MiCA transition, highlighting potential user migration challenges.
Bruna Sego, the head of the Anti-Money Laundering Authority (AMLA), has raised concerns about potential challenges facing crypto services in the European Union following the end of the MiCA transition period. She indicated that a rush of users migrating from departing crypto service providers (VASP) could overwhelm existing systems.
Sego pointed out that as some VASPs exit the EU, there may be significant withdrawals of client funds, while licensed firms could see a surge in new users. This dual scenario poses risks for compliance with customer verification and anti-money laundering (AML) regulations.
End of MiCA Transition Period
The transition period for the Markets in Crypto-Assets (MiCA) regulation concluded on July 1, after which firms must register under the new regulations to offer services in the EU. Prior to this, companies could operate under national licenses if their activities started before December 30, 2024.
At the close of the transition, the European Securities and Markets Authority (ESMA) reported 244 licensed crypto service providers across the EU and EEA, with firms from Italy, France, Malta, and Spain joining just before the deadline. Notably, Ripple secured full MiCA authorization on July 6.
ESMA had previously mandated that unlicensed companies cease operations immediately and initiated inspections focusing on custodial services in the crypto sector.
AMLA's Future Initiatives
In anticipation of the transition's conclusion, AMLA issued an advisory note recommending strategies for both exiting firms and licensed VASPs welcoming new clients. The authority plans to release a report by year-end addressing money laundering risks in the crypto sector and methods for monitoring service providers across EU nations. Enhancements in blockchain analytics are also underway.
Sego noted that the upcoming study's insights will aid AMLA in collaborating with national regulators to create a cohesive strategy for overseeing crypto services within the EU. Additionally, the European Parliament has recently approved a stance for further regulation of digital assets, emphasizing expanded oversight of decentralized finance (DeFi), NFTs, staking, and crypto lending.
