Crypto exchange OKX selected Malta as its Market in Crypto-Assets (MiCA) hub to serve 450 million EU residents, according to a July 18 statement.

The exchange highlighted explained that this strategic move will allow it to offer services in compliance with local regulations while ensuring easy deposit and withdrawal connectivity to local bank accounts.

Under the MiCA framework, OKX plans to offer spot trading, including EUR and USDC pairs, and comprehensive crypto services allowing its users to buy, sell, convert, and stake popular digital assets.

Why Malta?

OKX explained that it chose Malta as its MiCA hub for various reasons, including its high regulatory standards.

According to the firm, the country is well-known for its comprehensive regulatory framework for blockchain technology. This makes it an ideal base for expanding its products into the European market, OKX said.

Furthermore, OKX stated that another significant factor influencing its choice was the robust infrastructure and local team it has developed in the country since 2018. It added:

“Our local entity, Okcoin Europe Ltd, has been licensed as a Class 4 Virtual Financial Assets (VFA) Service Provider by the Malta Financial Services Authority (MFSA) since 2021. This establishes a strong regulatory foundation for us to offer secure and compliant services across the EU.”

MiCA effect

The MiCA regulation is already significantly affecting crypto operations in Europe.

MiCA is a regulatory framework created by the European Union to standardize crypto regulations across member states. The European Parliament approved MiCA last year, and the rules are being implemented in phases.

The first phase of MiCA, targeting stablecoins, took effect on June 30. The second phase will follow in six months.

On July 1, Circle, the issuer of USDC, became the first global stablecoin firm to comply with MiCA. Additionally, the Cardano blockchain released its sustainability indicators to ensure compliance with the European MiCA regulations.

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The European Banking Authority (EBA) has updated its Travel Rule guidelines to include crypto service providers and intermediaries, according to a July 4 statement.

Starting Dec. 30, 2024, crypto exchanges in the European Union must follow the Travel Rule guidelines (EU-2023/1113). The rule mandates that exchanges report information on funds and crypto asset transfers. It specifies the information needed for transfers and how to detect and address missing data.

This update is part of the EU’s efforts to combat money laundering and terrorist financing. The EBA aims to ensure traceability of asset transfers for investigations. Once implemented, payment service providers (PSPs), intermediary PSPs, Crypto-Asset Service Providers (CASPs), and intermediary CASPs will have two months to comply.

EBA stated:

“The deadline for competent authorities to report whether they comply with the Guidelines will be two months after the publication of the translations into the official EU languages.”

The guidelines also require gathering user information to identify if transactions are service-related or linked to other transfers. Crypto service providers must also announce their policies on cross-border transfers.

The EBA argues that the guideline offers long-term benefits. It supports the EU’s Markets in Crypto-Assets (MiCA) regulation and aims to create unified regional regulations. Overall, it is expected to curb money laundering and counter-terrorist financing in the EU. The regulator added:

“Its main objective is to make the abuse of funds and certain crypto-asset transfers for terrorist financing and other financial crime purposes more difficult, and to enable relevant authoritiesto fully trace such transfers where thisis necessary to prevent, detect or investigate money laundering and terrorism financing (ML/TF).”

The Travel Rule guideline update comes as the second phase of the MiCA regulation approaches. While the first phase, focusing on stablecoins, is already in effect. The second phase, targeting crypto asset service providers, will begin by the end of the year.

Crypto Asset Service Providers (CASP) in Europe would have to implement stringent Know Your Customer (KYC) procedures to combat money laundering following the European Parliament greenlight of new Anti-Money Laundering Regulations (AMLR), according to an April 24 statement.

According to the statement:

“The new laws include enhanced due diligence measures and checks on customers’ identity, after which so-called obliged entities (e.g. banks, assets and crypto assets managers or real and virtual estate agents) have to report suspicious activities to FIUs and other competent authorities.”

The law also incorporates non-financial sectors prone to money laundering or terrorist financing, such as gambling and sports clubs.

Under the AML, a new regulatory body called the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) will oversee and enforce compliance with the revamped protocols.

Notably, this development chiefly impacts centralized exchanges under the EU’s Markets in Crypto Assets (MiCA) umbrella.

MiCA is crucial legislation for the crypto sector in Europe and offers essential regulatory clarity for this burgeoning industry. Market observers have argued that this framework highlights the region’s acknowledgment of the sector’s potential. MiCA was enacted in June 2023 and would become enforceable by the end of this year.

Expected outcome

Patrick Hansen, the EU Strategy and Policy Director for Circle, pointed out that the outcome of the votes was expected, adding that:

“As expected, the EU Parliament plenary passed the new AML package, including the AML Regulation with 479 votes in favour, 61 against, and 32 abstentions. The package will now be formally adopted by the Council of the EU as well and enter into application 3 years later.”

In a separate post, Hansen emphasized that the regulations largely mirror existing anti-money laundering laws, echoing provisions from the MiCA regulation banning privacy coins and the Transfer of Fund Regulation (TFR).

Notably, initial proposals threatening the crypto sector were scaled back. These included proposals to cap self-custody payments at €1,000 and subject decentralized autonomous organizations (DAOs), DeFi, and non-fungible token (NFT) platforms to AMLR obligations.

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