AMLD5: a Watershed Moment for EU Crypto Service Providers


AMLD5 – the 5th anti money laundering directive – has become effective per January 10, throughout the EU. Crypto exchanges and custodian e-wallet providers fall now under the same legal frameworks as banks and other financial institutions. Effectively, it means that these two types of crypto service providers are obliged to do customer due dilligence, more popularly known as KYC (know your customer), and will need to report suspicious transactions to national financial investigation units. Moreover, it’s forbidden to offer custodian wallet services to EU citizens from outside the Union.

Not all EU countries have already transposed AMLD5 into national law. The Dutch senate (Eerste Kamer) still needs to approve the crypto law that already passed its lower house (Tweede Kamer). In The Netherlands, the Dutch National Bank (DNB) is the acting supervisor. In most other countries, financial market authorities are appointed as crypto supervisor, like in France which has already passed its crypto laws early last year.

As crypto service providers are required to register in each EU country in which they are active, and national “on top of” legislation is expected, the EU completely stops to be the freewheeling, anarchistic crypto sandbox that it still was till 2019. The dramatic consequences are already felt.

Exchanges on the Run

The Dutch crypto options exchange Deribit announced to move its exchange activities to Panama, which is unlikely to be sufficient as long as its still handling the accounts of EU and UK citizens. An ever growing list of smaller crypto service providers – like Bottle Pay, Simplecoin, and Chopcoin claim that they can’t handle AMLD5 requirements and therefore stopped all their operations. Bittrex moved ahead of the AMLD5 deadline from Malta to Liechtenstein in the vain hope to dodge the regulatory implications. Also many other global exchanges are ill-prepared: Panama-based IDEX, ran by a US team, has no clue yet what to do with its large European customer base. Many other players in the field are similarly unprepared or still believe that they can hide in their pirate safehavens, like Latoken on the Cayman Islands. Those times are of course over.

The Good Guys

Larger or more ambitious service providers will comply with AMLD5 regulations. Blockport was acquired by fintech BUX, which is already subject to AMLD oversight, and has the necessary know-how. Nocks and Txbit are preparing for KYC requirements and registration at DNB in The Netherlands. Coinex acquired a crypto license in Estonia.

During 2020, the crypto service landscape in the EU and UK will go through a complete metamorphosis. The survivors will become part of the financial establishment. It’s good news for their clients, who no longer need to fear that their bank accounts will be closed, just because they were trading cryptos.

ICURY only engages with AMLD5 compliant service providers

What does that mean for our ICURY (ICY) project? As the issuer, Icecat, itself is neither an exchange nor a wallet provider (yet), the path forward is very simple. We only work together with crypto service providers that make the effort to be AMLD5 compliant in so far they focus on EU citizens, or comply to compatible legal frameworks in other jurisdictions. We don’t want our Icecat users to be exposed to malpractices.

Founder and CEO of Icecat NV. Investor. Ph.D.

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