New laws were created to battle money laundering
The issue of digital assets and their regulation is still an ongoing one in the European Union. July 4, 2022, saw members of the EU Parliament proposing new amendments to already established anti-money laundering legislation. These new amendments would bring NFT exchanges into the new AML/CFT framework. These proposals are meant to strengthen and bring up-to-date protections against money laundering and the funding of terrorism.
Lawmakers were able to reach a deal on the MiCA proposal which set rules that created a new regulatory regime for digital assets in the European Union. The proposal covered issuers of unbacked crypto-assets and “stablecoins”. The framework was created to protect investors and preserve financial stability. The goal is to protect consumers against some of the risks that come with trading on the blockchain.
Certain rules are set for this proposal which include service providers being required to respect strong requirements to protect consumers’ wallets and become liable in case they were to lose the investors’ assets. Providers of crypto assets will be required to declare all information on the impact their project has on the environment. The AMIL will cover crypto assets, stablecoins will be required to offer a sufficient liquid reserve and every stablecoin holder will be offered a claim.
The European Council also published a partial position paper on an Anti-Money-Laundering-Authority (AMLA) that is soon to be established and will have authority over digital asset service providers and “obliged entities” MiCA is poised to protect European citizens that have invested in digital assets and prevent providers from misusing crypto and digital assets and maintain innovation, putting an end to what is called the “crypto wild west” at the time of the meeting NFTs were not mentioned but new rules are planned to be implemented to include the digital art offerings.
The amendments for NFTs would specify a classification for digital art providers and regulate those that are acting as intermediaries for importing, minting, sale and purchase ( think launchpads such as Magic Eden). This is meant to provide those that purchase NFTs with a bit of relief from their woes and worries of rug pulls. NFTs have also been leveraged for money laundering activities and the amendments offered in the future plan to combat those abilities.
Consumer safety is still very much at the top of the pile of issues that need to be tackled. Recent lawsuits faced by OpenSea highlight the need for a safe space for purchasers of digital collectibles