In a recent statement on July 4th, the European Banking Authority (EBA) announced updates to their Travel Rule guidelines. This update now includes regulations for crypto service providers and intermediaries in the European Union.
Starting on December 30, 2024, all crypto exchanges operating within the EU will be required to adhere to the Travel Rule guidelines (EU-2023/1113). This rule mandates that exchanges report detailed information on funds and crypto asset transfers to combat money laundering and terrorist financing.
Compliance Requirements
The guidelines specify the necessary information for transfers and outline procedures to detect and address missing data. Payment service providers (PSPs), intermediary PSPs, Crypto-Asset Service Providers (CASPs), and intermediary CASPs will have a two-month window to comply once the guidelines are fully translated into official EU languages.
Crypto service providers are now required to gather user information to distinguish between service-related transactions and other transfers. Additionally, providers must disclose their policies on cross-border transfers to ensure transparency and accountability.
The EBA argues that the updated guideline will have long-term benefits in combatting money laundering and counter-terrorist financing. It aligns with the EU’s Markets in Crypto-Assets (MiCA) regulation and aims to establish unified regional regulations for crypto services.
Main Objective
According to the regulator, the main objective of the guideline update is to make it more difficult to abuse funds and crypto-asset transfers for terrorist financing and other financial crimes. The guidelines aim to enable authorities to fully trace transfers when needed to prevent, detect, or investigate money laundering and terrorism financing.
The Travel Rule guideline update coincides with the second phase of the MiCA regulation, which is set to target crypto asset service providers by the end of this year. The first phase, which focused on stablecoins, is already in effect, showcasing the EU’s commitment to regulating the crypto industry effectively.