The UK’s self-regulatory trade association for the cryptoasset industry has backed plans for anti-money laundering rules to be applied to investment in cryptoassets, responding to a Treasury consultation that seeks to transpose into UK law the latest anti-money laundering legislation agreed at an EU level, known as the 5th Money Laundering Directive (5MLD).
5MLD seeks to build on previous legislation introducing requirements for cryptoasset exchanges and custodian wallet providers for the first time.
Responding to the detail of the consultation, CryptoUK has warned regulators against adopting a definition of cryptoassets which is too broad and could capture a wide range of activities such as airline frequent flyer points or customer loyalty schemes.
In addition, CryptoUK has raised questions on the consultation’s proposals for regulating open source software.
CryptoUK’s Code of Conduct already requires members to adhere to strict anti-money laundering, counter terrorist financing (CTF) and Know Your Customer (KYC) procedures, the transposition of the directive means the regulations will apply to all those operating within the crypto industry. This ensures both consumers and businesses can operate with greater confidence when interacting with the intermediaries that deal with their cryptoassets.
The UK plans to go even further than the current 5MLD legislation, having taken on board the recommendations of the international Financial Action Task Force, whose new standards oblige members to regulate cryptoassets and cryptoasset service providers. CryptoUK’s response to the consultation welcomes these moves with caution, encouraging HMT to continue to undertake further research and to listen to the concerns of the industry before full implementation of 5MLD.
Iqbal V. Gandham, Chair of CryptoUK, said
“CryptoUK’s members already set the industry standard by carrying out extensive KYC and AML checks, so we welcome the move to enforce these rules across the industry, bringing cryptoassets into line with other financial services.
“To support the UK in becoming a global centre for the industry, it is vital that we get the detail of implementation right. To make this happen, government and regulators must continue to work closely with the cryptoassets sector to support innovation and prevent bad actors.”