New Aml regulation: From ‘virtual currency’ to ‘crypto assets' — differentiation from tokenised financial instruments and potential concerns over the perceived end of pseudonymity in the crypto sector

In adopting new regulatory measures, the EU is increasing its efforts to prevent money laundering and terrorist financing. Aside from a uniform and EU-wide ban on cash transactions over €10,000 and the establishment of a common European anti-money laundering (AML) authority, the new rules specifically tackle the growing crypto economy. While existing AML regulations already cover various business activities related to crypto-assets such as Bitcoin & Co., there is still considerable leeway for interpretation and uncertainty. The currently applicable definition of ‘virtual currencies' and demarcation issues to financial instruments subject to stricter regulatory regimes are prominent examples of this. As an answer to these issues the new term ‘crypto-asset’, introduced by the upcoming crypto regulation MiCAR, is going to be consistently used in the new anti-money laundering regulation as well as MiCAR, promising more legal clarity for the future. Meanwhile, headlines about the alleged end of ‘(pseudo)anonymity of crypto-assets' due to the new AML rules are already appearing on the European media landscape. This paper provides an overview of the potential implications of these new regulations for businesses, investors and users, as well as seeking to alleviate some of the fears of the market.