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>>European regulators express concern that cryptocurrency companies are avoiding compliance with the EU's MiCA regulations.

European regulators express concern that cryptocurrency companies are avoiding compliance with the EU's MiCA regulations.

crypthub

about 20 hours ago

Regulatory Sidestepping in Crypto

The European Banking Authority (EBA) recently reported attempts by some crypto firms to avoid new EU regulations like MiCA and enhanced AML/CFT frameworks. These efforts include "forum shopping," where firms seek licenses in jurisdictions with laxer approval processes to then operate across the EU. The EBA cautioned that these actions pose significant risks to the EU's financial system. No specific company was identified in the report.

MiCA Transition and Ongoing Challenges

MiCA, enacted in late 2024, aims to harmonize crypto regulations across the EU but includes a transition period until mid-2026. During this window, firms can operate without full compliance while appealing decisions or awaiting licenses. This period presents a challenge for regulators to effectively enforce the new framework. A lawyer noted that regulators must acknowledge differing enforcement mentalities across member states.

Opaque Structures and Illicit Activity

The EBA flagged concerns about crypto firms establishing operations with unclear governance and beneficial ownership. Some virtual asset service providers (VASPs) have applied for licenses in multiple jurisdictions, revealing complex structures with entities often based outside regulatory oversight. These opaque structures raise the risk of illicit funds being channeled through shell companies and highlight the need for enhanced transparency.