The European Union is reportedly planning to give its new money laundering watchdog oversight of crypto firms.
The European Commission is overseeing the demand and remit of a new financial watchdog which is expected to be fully operational by 2026, Bloomberg first reported. A bloc of member states, spearheaded by Germany, is seeking to make the inclusion of cryptocurrency firms in its remit more explicit an EU diplomat has learned.
The bloc of states, which includes Spain, Austria, Italy, Luxembourg and The Netherlands, wants the new watchdog to have oversight of risky cross-border money transfers the diplomat told Bloomberg. The Commission’s latest set of proposals contain only vague reference to “virtual assets.”
Calls for tighter regulation of crypto come after an explosion of interest in the crypto space across 2021 which saw the digital asset industry reach a global market cap of $2.6tn (£1.9tn). Growing volumes of crypto transactions have created new avenues for criminal activity with illicit transactions jumping 80 per cent to $14bn in 2021, according to Chainalysis.
While the proportion of total crypto transactions associated with illicit activity declined, law enforcement and regulators are still struggling to keep on top of rapidly evolving digital asset technology.
Last week the UK’s tax authority seized three NFTs and opened 20 investigations involving digital assets in a sign that crypto is being used for tax evasion and fraud.