The European Banking Agency (EBA) is strengthening regulatory oversight over the cryptocurrency sector. In recent developments, the EBA has issued two detailed sets of guidelines to manage operations of cryptoasset service providers (CASPs) and payment service providers (PSPs). As part of these directives, the EBA highlights the need for compliance monitoring agencies to strengthen efforts to mitigate risks that may harm consumers.
The agency has asked payment service providers to screen all companies that want to register their business in European countries. EU lawmakers have asked virtual digital asset service providers (VASPs) to conduct multi-level due diligence, including thorough risk assessments.
“The EU regulations on restrictive measures do not specify how financial institutions should comply with the restrictive measures regime, but emphasize the need to implement necessary due diligence procedures and conduct appropriate inspections to avoid violations of regulations,” the EBA said.
The first set of guidelines provides fintech companies with instructions on keeping their governance structures and internal policies consistent. The second group outlines the steps these companies must take to handle crypto transactions as required by law.
The directive mentioned: “Implementing an exposure assessment of restrictive measures should provide a basis for the agency’s decision on the types of controls and measures required to effectively comply with the restrictive measures.”
The document further recommends that Fintech and Web3 platforms implement a screening system that is consistent with the restrictive measures stipulated by EU regulators. The final guide will be translated into all official EU languages and will be published on the EBA website, although the release schedule remains undisclosed.
For some time, the EU has been actively regulating the virtual digital asset (VDA) space. Last year, it finalized its Mica regulations that built clear DOS and NOTS for the Web3 business. Given the high volatility of crypto assets, global governments, including the EU, are committed to protecting their citizens from potential financial risks.
