How Will The New AMLD5 Affect European Crypto Exchanges?


AMLD5 has come into effect Yesterday January 10, 2020. But what does it mean and how will it affect European crypto exchanges?

January 11, 2020, | AtoZ Markets – European cryptocurrency firms are expecting a stricter regime of regulations as the 28 EU states are preparing to adopt the 5th Anti-Money Laundering Directive (AMLD5).

The new EU directive requires European crypto exchanges and custodial service providers to register with their local regulators. They will also demonstrate compliance with thoroughgoing know-your-customer (KYC) and anti-money laundering AML procedures.

However, the AMLD5 will be a burden to small firms and even force them to either merge or fold. The Netherlands-based crypto exchange Deribit has already found a solution. The firm is moving to Panama. The AMLD5 version of regulations in that country is not putting such high barriers and has reduced costs for traders.

AMLD5 will make authorization and registration of crypto exchanges more difficult

The current norms on traditional finance are not right for the crypto space. On the other hand, the AML crypto authorization schemes are different from one European country to another. When everything will be regulated under AMLD5, the authorization and registration of crypto firms will turn out to be very complex processes. Malcolm Wright, the AML Working Group’s head at Global Digital Finance and chief of compliance officer for Diginex had this to say about Europe’s crypto future:

“There almost needs to be a more coordinated approach to make sure it allows the industry to still flourish and offer services to residents in the EU who want to invest in virtual assets products.”

FATF guidance includes crypto-to-crypto exchanges

The AMLD5 has been in discussions for about 2 years. It has received some recommendations made by the Financial Action Task Force (FATF) in October 2018 and June 2019.

While AMLD5 is addressing cash to crypto and the other way around transactions, FATF’s guidance includes crypto-to-crypto transactions too. It also has some requirements on the sharing of traditional to crypto payments data under its famous “travel rule”.

AMLD5 will impose extra-restrictions on firms providing non-custodial wallets

Many are concerned about AMLD5’s extra-restrictive policy for firms that provide non-custodial wallets on a decentralized basis, especially since Germany and the UK are determined to implement this policy. This means Ethereum (ETH)-based finance platform Monolith (former TokenCard) and Wirex, the crypto payment card provider, would find it very difficult to comply with the new regulations.

AMLD5 postponed in the Netherlands

In the Netherlands, there seems to be a lot of confusion over the definition of “license”, not to mention the central bank and the Dutch Ministry of Finance believe an onerous AMLD5 version has been given to crypto players in the country. It seems the January 10 deadline for AMLD5 will be missed in the Netherlands. This is as a result of a “serious disagreement between legislators and industry”.

What do you think about the new AMLD5 and European crypto exchanges? Share your thoughts in the comments section below!

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