Safe trading: The European Union focuses on regulating cryptocurrencies

The European Union Securities and Markets Authority (ESMA) will continue to focus on cryptocurrency regulation to ensure platforms and digital exchanges are aligned with anti-money laundering legislation in place. 

The authority has announced that cryptocurrency trading and transactions will be monitored to protect consumers, users, and traders across the sector. In a public tender document, ESMA posted that it will be setting out to collect additional data from firms and all major exchanges. As per the announcement:

“The coverage should encompass all major exchanges and crypto assets so that it provides a fair representation of the crypto market landscape. Data should be available with daily frequency and include access to order books where to see spreads and liquidity across exchanges and trading pairs (in fiat and crypto).”

The regulator will be looking for crypto off-chain data and crypto-related transactions that were not originally made on the blockchain. This includes spot and derivatives trades, according to ESMA, which are made at centralized exchanges and firms as well as over-the-counter (OTC) platforms. This excludes automated trading platforms like The Bitindex AI and other automated trading technologies on the market. 

As per ESMA’s regulations in place, the current contract ceiling is €100,000, corresponding to the maximum duration of the framework contract of four years. 

The European crackdown on unregulated crypto interactions

Officials from the European Council have recently agreed to focus on creating a single, specific regulatory framework for cryptocurrency issuers and service providers. This will see the proposed development and launch of a dedicated anti-money laundering authority (AML) put in place for the European Council to monitor crypto firms. According to ESMA, the authority will have the authority to oversee “high-risk and cross-border financial entities if they are considered risky.”

European Parliament member Ernest Urtasun commented on the development of stronger regulatory practices in the EU, saying:

“After months of negotiations with the Council, we agreed the most ambitious travel rule for transfers of crypto-assets in the world. We are putting an end to the wild west of unregulated crypto, closing major loopholes in the European anti-money laundering rules.”

The separate authority for cryptocurrency - with regards to anti-money laundering - was initially proposed in July 2021 and has been part of European Council discussions since. According to the authority, the crypto AML regulation should be operational by 2024. Until then, the European Commission will be working to start the work of supervision of cryptocurrency firms.

It remains to be seen whether the European Council’s cryptocurrency authority framework will be used by the United Kingdom and other European countries outside of the European Union. 

While it’s slightly over a decade since Bitcoin was launched, the cryptocurrency industry is still nascent and regulation across the world is still developing. When trading Bitcoin or buying cryptocurrency, make sure you know the regulatory protocols and processes in your region. 

The more you know about crypto trade and legislation, the better position you might be in your trading. Having insight into nuances in the industry can give you the upper hand in the industry, as regulatory news can sway the market and have an impact on the price of Bitcoin and the broader digital market.