Cryptocurrencies: Legal, member-states may not introduce their own cryptocurrencies Cryptocurrency exchanges: Regulations vary by member-state
Cryptocurrency exchanges are not currently regulated at a regional level. In certain member states, exchanges will have to register with their respective regulators such as Germany’s Financial Supervisory Authority (BaFin), France’s Autorité des Marchés Financiers (AMF), or Italy’s Ministry of Finance. Authorisations and licenses granted by these regulators can then ‘passport’ exchanges, allowing them to operate under a single regime across the entire bloc. In April 2018, the EU agreed on the text for the Fifth Money Laundering Directive (5MLD) which will bring cryptocurrency-fiat currency exchanges under EU’s anti-money laundering legislation. 5MLD will require exchanges to perform KYC/CDD on customers and fulfill standard reporting requirements.
Cryptocurrency exchanges in the UK generally need to register with the Financial Conduct Authority (FCA) – although some crypto businesses may be able to obtain an e-license, instead. Although it doesn’t make special provisions for exchanges, FCA guidance stresses that entities engaging in crypto-related activities which fall under existing financial regulations for derivatives (like futures and options) require authorization.
The EU is actively exploring further cryptocurrency regulations. In February 2018, European Central Bank president, Mario Draghi, stated authorities were working with the Single Supervisory Mechanism to develop a way of identifying the financial risks that cryptocurrencies pose.
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