USDC Issuer Circle Responds to EU’s Proposal To Expand Crypto Regulatory Oversight
US Dollar Coin (USDC) stablecoin issuer Circle is responding to proposed changes to the European Union’s (EU) financial crime policies, which would impact crypto companies.
In May, the European Banking Authority (EBA) launched a public consultation on amendments that would extend the scope of EU’s guidelines on money laundering and terrorist financing (ML/TF) risk factors to crypto asset service providers (CASPs).
The proposed amendments seek to provide standards that will enable crypto asset service providers to effectively identify and mitigate money laundering and terrorist financing activities.
The financial watchdog also introduces sector-specific guidance, citing that CASPs may have increased risks to financial crimes because of the use of innovative technologies, and instant transfers of crypto assets and services with privacy-enhancing features.
In a statement, Circle says it welcomes the guidelines, but raises concerns on three issues.
The firm says the use of the term “providers of services in the crypto-assets ecosystem” in the proposal lacks clarity. The stablecoin issuer suggests that the EBA instead use the term “crypto-asset service provider” already defined in the EU’s Markets in Crypto-Assets Regulation (MiCA) law.
“The broad terminology used could unintentionally 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, thus presenting a limited risk of money laundering and terrorist financing.”
Circle also says the use of technology does not necessarily affect ML/TF risks.
“CASPs that facilitate transfers to and from self-hosted wallets should not be designated higher-risk entities under the guidelines.”
The stablecoin issuer says the guidelines should not cover EU firms that are exempt from the regulatory scope of the MiCA.
“The fact that they are left out of EU regulations indicates that they do not warrant financial, prudential and AML regulation in the EU and should therefore not be subject to these EBA guidelines.”
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