Welcome to the Inaugural Issue of The Crypto Chronicle!

In this quarterly newsletter, we’re thrilled to bring you a curated selection of the latest
blockchain and cryptocurrency news, with a primary focus on the European Union. As we
dive into the first quarter of the year, we’ll explore key developments, regulatory updates, and
exciting projects emerging from the EU’s dynamic landscape.
But that’s not all – we’ll also provide brief glimpses into noteworthy global trends and
innovations shaping the world of blockchain.

Frankfurt to host the EU’s new anti-money
laundering authority (AMLA)

The European Union’s Anti-Money Laundering Authority (AMLA) is set to establish its
headquarters in Frankfurt, Germany, the financial hub of the country. Operations are
expected to commence by mid-2025.
The AMLA will be tasked with overseeing “high-risk and cross-border financial entities,”
including the cryptocurrency sector. Collaboration with financial intelligence units and
regulatory bodies across EU member states will be a key aspect of its activities.
The decision to locate the AMLA in Frankfurt was announced in a press release from the
Council of the EU and the European Council on February 22. Frankfurt was chosen over
other contenders such as Brussels, Dublin, Madrid, Paris, Rome, Riga, Vilnius, and Vienna.
Notably, Frankfurt already hosts the European Central Bank.
The AMLA’s governing structure will consist of a general board representing regulators and
financial intelligence units from all EU member states, along with an executive board
comprising a chair and five independent full-time members.

EU draft rules for stablecoin issuer complaint procedures

The European Union has released a draft of rules to improve regulation for stablecoin issuers
(especially in handling complaints) as part of the broader Markets in Crypto-Assets (MiCA)
framework. These rules, known as Regulatory Technical Standards (RTS), were issued on
March 13 and outline procedures for effectively addressing complaints from holders of asset
reference tokens (ARTs), which include stablecoins.

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The development of these rules is the result of collaborative efforts between the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA). Consultations held between July and October 2023 paved the way for these standards, emphasizing the importance of fostering innovation and fair competition while prioritizing the protection of retail holders and market integrity in the crypto asset space.

The finalized draft of these RTS’ is expected to be submitted to the European Commission for approval by the end of June. Following approval, the standards will undergo further scrutiny by the European Parliament and the European Council before being formally published in the Official Journal of the European Union.

The MiCA framework defines stablecoins that are pegged to multiple fiat currencies or other assets, including cryptocurrencies, as asset reference tokens (ARTs). This distinction is significant, particularly when compared to stablecoins linked solely to the value of a single currency, such as the euro or the dollar.

Recent events, including the collapse of Terra’s UST stablecoin, have underscored the need for enhanced oversight of stablecoins within the EU. The MiCA legislation also includes provisions for stringent screening of shareholders and board members of crypto asset service providers (CASPs), aimed at ensuring the separation of customer assets and trading activities. This measure aims to prevent situations like the commingling of customer and company funds, as observed in cases such as FTX.

The full implementation of the MiCA regulatory framework is anticipated by December, with specific regulations targeting stablecoins set to be rolled out in the summer.

EU banking authority extends AML guidance to crypto

The European Union’s banking authority has expanded its Anti-Money Laundering (AML) guidelines to include crypto, marking a significant step in the region’s efforts to combat financial crime.

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According to the European Banking Authority, these guidelines now extend to include EU-based crypto firms. The decision, announced on January 16th, aims to assist CASPs in identifying their exposure to financial crimes, considering factors such as customers, products, delivery channels, and geographical locations.

In addition to extending the guidelines, the EBA emphasized the importance of crypto firms adjusting their measures to combat financial crime effectively. This may involve leveraging tools such as blockchain analytics. The updated guidelines will provide tailored risk assessments and guidance specific to cryptocurrencies and crypto companies. Moreover, they will direct financial institutions holding or serving crypto firms to consider various risk factors, including features that enhance anonymity, self-hosted wallets, decentralized platforms and products facilitating transfers between companies and such services.

The guidelines will become effective from December 30, 2024.

EU regulators to investigate banks’ crypto exposure

EU regulators will look into banks’ crypto exposure, with the European Banking Authority teaming up with the European Systemic Risk Board and the Financial Stability Board.

The EBA aims to explore how traditional banks are connected to non-bank financial institutions (NBFIs).

The European Systemic Risk Board (ESRB) and the Financial Stability Board (FSB) will focus on assessing hedge funds, private equity firms, and crypto platforms.

Jose Manuel Campa, Chair of the EBA, announced the plan in an interview with the Financial Times. He stressed the need to understand how banks and NBFIs could affect each other during tough times, saying, “We should be doing more and we are going to be doing more. We need to have an understanding of the whole underlying chain in NBFIs.”

Campa mentioned that the EBA had already checked banks’ exposure to non-banks, including loans. However, he said the lack of standard data in the NBFI sector was a challenge.

The FSB estimates NBFIs hold assets worth about $218 trillion, which is roughly 46% of global assets, more than traditional banks’ assets, which are about $183 trillion.

EU abandons proposed crypto wallet payment limits

The European Union has discarded the proposed 1000€ payment limit for self-custody crypto wallets in its new Anti-Money Laundering laws. Despite limitations on cash and certain crypto transactions, the final version of the legislation excludes the previously suggested restrictions on non-custodial wallet payments.

Following the passage of the Anti-Money Laundering Regulation (AMLR) by the European Union’s Economic and Monetary Affairs Committee and the Civil Liberties, Justice and Home Affairs Committee on March 19, the proposed limit on cryptocurrency payments from self-hosted wallets was removed. Additionally, a provision requiring identity checks on self-hosted wallet recipients of funds was also eliminated.

However, CASPS are mandated to conduct “customer due diligence” checks on users engaging in business transactions of at least 1000€. The legislation sets a cap of 10 000€ for cash payments (EU member states having the flexibility to establish lower limits) and prohibits anonymous cash payments exceeding 3000€. The AMLR is anticipated to become fully operational within a timeframe of three years, likely by 2027, pending approval from the EU Council and the European Parliament plenary, scheduled for April 10.

Estonia to introduce new rules for CASPs

A bill to regulate cryptocurrency service providers has been approved by the Estonian government. The new bill establishes legal requirements for crypto companies, placing them under the supervision of the Financial Supervision Authority (FSA) starting from 2026.

The introduction of targeted regulation has been a long time coming. Matis Mäeker, head of The Financial Intelligence Unit (currently supervising CASPs), explained that the significant change lies in subjecting crypto service providers to real financial supervision, moving beyond mere compliance with anti-money laundering requirements. With client assets akin to deposits in banks, these companies must now adhere to stringent financial standards to ensure the safety of customer funds.

The new law introduces stricter operational and reporting requirements, with fines of up to €5 million compared to the previous cap of €40,000 under the Anti-Money Laundering Act.

Minister of Finance, Mart Võrklaev highlighted that licenses will be issued by the FSA from 2025 onwards and existing license holders from the Financial Intelligence Unit will need to obtain additional or new licenses by 2026 to continue operating. Võrklaev emphasized the importance of compliance with regulatory requirements for firms wishing to remain operational.

MetaMask partners with CoinLedger and Koinly to make tax reporting easier for users in Europe, Canada, USA and UK

Tax reporting for MetaMask users has become much simpler thanks to partnerships with both Koinly and CoinLedger. MetaMask has teamed up with Koinly to streamline tax reporting, enabling users to import their transaction history directly into Koinly’s platform with ease. This collaboration, launched on March 12, 2024, not only simplifies the process but also offers users discounts on Koinly plans.

Additionally, MetaMask has partnered with CoinLedger, a platform specializing in cryptocurrency tax reporting software. This collaboration, announced on March 18, allows MetaMask users to export their tax information into CoinLedger with a single click. CoinLedger’s CEO, David Kemmerer, emphasizes the significance of this partnership, highlighting the integration with MetaMask’s Portfolio offering. Users can now sync their portfolios with CoinLedger and generate tax forms directly from MetaMask Portfolio, streamlining the tax reporting process.

Spanish citizens to declare foreign crypto holdings by end of March 2024

New legislation concerning the taxation of virtual assets requires Spanish residents who possess any cryptocurrency assets on platforms located outside Spain to declare them by March 31, 2024. Both individual and corporate taxpayers are mandated to report the funds held in their overseas crypto accounts as of December 31, 2023. However, only individuals with cryptocurrency holdings exceeding the equivalent of 50 000€ on their balance sheets are obligated to disclose their foreign holdings.

More news and updates around the world:

Dubai International Financial Center (DIFC) has launched their Digital Assets Law, which promises to regulate digital assets across diverse use cases, harnessing the transformative power of blockchain technology. Read more: https://www.difc.ae/whats-on/news/difc-announces-enactment-of-new-digital-assets-law—new-law-of-security-and-related-amendments
The Ministry of Finance of Lithuania has recently announced an update to the draft legal package for crypto service providers under the MiCA Regulation. The deadline for crypto service providers to acquire a license under Lithuania’s MiCA Regulation has been pushed to June 1, 2025. This extension, announced by the Lithuanian Ministry of Finance, offers an extra six months for licensing procedures, allowing providers more time to comply before MiCA is fully implemented. Read more in Lithuanian: https://finmin.lrv.lt/lt/naujienos/finansu-ministerija-issamesnis-kripto-rinkos-reguliavimas-didins-sektoriaus-skaidruma/
The Australian Securities and Investments Commission (ASIC) will focus on desired regulatory outcomes as it closes in on building and releasing a range of regulatory reforms for the crypto sector. Read more: https://asic.gov.au/about-asic/news-centre/speeches/crypto-and-digital-assets-policy-regulation-and-innovation/
Sweden’s central bank, The Riksbank, has released its final report on its digital krona pilot project. The report looks at the experience of end-users and focuses on offline functionality. There results were mixed. Read more: https://www.riksbank.se/globalassets/media/rapporter/e-krona/2024/e-krona-pilot-phase-4.pdf
BlackRock begins asset tokenization by filing for the BlackRock USD Institutional Digital Liquidity Fund. Read more: https://twitter.com/rleshner/status/1770151746129563777; https://www.sec.gov/Archives/edgar/data/2013810/000201439024000001/xslFormDX01/primary_doc.xml
Pakistan, who recently signed new laws to ensure the launch of a central bank digital currency (CBDC) by 2025, is now developing a blockchain-based national eKYC banking platform. Read more: https://dailytimes.com.pk/1068605/pakistan-banks-association-launches-national-blockchain-based-ekyc-platform/
The Isle of Man is considering expanding its definition of ‘investment’ to encompass cryptocurrencies. This move would entail crypto firms adhering to the qualification standards set for investment businesses, despite these standards not being originally tailored for the crypto market. Read more: https://consult.gov.im/financial-services-authority/regulation-of-crypto-asset-activities/supporting_documents/20240212Crypto_Discussion_Paper_for_Hub.pdf
Torrevieja, a popular tourist destination within Spain’s Alicante province, is set to enable stores to accept cryptocurrency payments, marking a significant step towards wider adoption. In an effort to establish Torrevieja as a crypto-friendly European city, local authorities and businesses plan to digitize the local economy through the implementation of blockchain technology. Read more: https://torrevieja.es/es/noticias/2024-02-06-apymeco-convertira-torrevieja-primera-ciudad-crypto-friendly-europa

Frankfurt to host the EU’s new anti-moneylaundering authority (AMLA)