A recent European Union agreement to crack down on the “wild west” in international crypto markets is “not a threat for the Luxembourg crypto market,” according to a senior official at international fund services firm Apex Group.
Representatives of the European Council and the EU parliament have reached a political agreement on the Markets in Crypto Assets proposal, known as MiCA, which covers issuers of unbacked crypto-assets, and so-called stablecoins, as well as the trading venues and the wallets where crypto-assets are held.
This new EU regulatory framework aims to protect investors and preserve financial stability, while allowing innovation and fostering the attractiveness of the crypto-asset sector, the EU has said. It also introduces stringent requirements to prevent money laundering.
“This agreement is definitely not a threat for the Luxembourg crypto market. On the opposite. It will bring more clarity in the European Union, protect investors and preserve financial stability, while allowing innovation and fostering the attractiveness of the crypto-asset sector,” said Renaud Oury, chief revenue and data officer at Apex Group.
Stringent requirements thrown at industry
On 30 June, a day before the French presidency of the European Council ended, the EU reached an agreement on MiCA that will lead to stringent, harmonised requirements for crypto service providers across all the member states in the EU. As a result of the deal, the industry will be presented with comprehensive requirements to protect consumers and to prevent money laundering.
“Recent developments on this quickly evolving sector have confirmed the urgent need for an EU-wide regulation,” Bruno Le Maire, French minister for the economy, finance and industrial and digital sovereignty, said at the time. “MiCA will better protect Europeans who have invested in these assets, and prevent the misuse of crypto-assets, while being innovation-friendly to maintain the EU’s attractiveness. This landmark regulation will put an end to the crypto wild west and confirms the EU’s role as a standard-setter for digital topics.”
The deal forces crypto-asset service providers to respect strong requirements to protect consumers’ wallets and become liable in case they lose investors’ crypto-assets. MiCA will also cover any type of market abuse related to any type of transaction or service, notably for market manipulation and insider dealing.
Privacy balance reinforced
Renaud said the EU agreement reinforces the balance between privacy, and the need to bring anti-money laundering and Know-Your-Customer compliance to crypto transactions. Verification of the identity of the beneficial owner of the unhosted wallet will be mandatory for large transfers above 1,000 euro. Crypto Asset Service Providers will be required to collect information and apply enhanced due diligence to all transfers involving unhosted wallets.
“Some may be concerned about what (providers) might do with this data, and the privacy implications of transferring the risk to the service provider,” said Renaud. “However, from Apex’s point of view, this agreement is fully aligned with our digital asset policies and reinforces the approach of this exciting market. Our client base is largely institutional, and all of our accounts use hosted wallets, digital custodians, and we only support transactions conducted on regulated exchanges.”
‘Transaction integrity’
“As regulation evolves, our policies will continue to focus on asset and transaction integrity. From a privacy point of view, investor information can be kept within a permissioned environment, anonymous to the public, but verifiable to a transaction administrator,” Renaud said. “We strongly believe in the future of crypto-assets, and we welcome any regulation that will bring trust and transparency.”
Bermuda-based Apex Group is an international service provider to the asset management industry. The firm is present in Luxembourg also with its FundRock and LRI Invest subsidiaries. It supports fund managers that hold digital assets in a number of countries. Last month it was awarded a contract in Canada for example to provide 3iQ, the largest digital asset fund manager, with fund administration, transfer agency and custody services.
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