SEC Keeps an Eye on EU Rules on Crypto and AML

SEC is drafting their own measures to create the “best practices in fintech regulation and adopting it in our jurisdiction.”

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Commissioner Kelvin Lester Lee of the Securities and Exchange Commission (SEC), stated that the Commission is closely studying the moves of the European Union (EU) in regulating digital assets. He disclosed this in his column for The Manila Times.

“The EU proposal is one of the many global developments as financial regulators try to keep pace with innovations in technology. Against this backdrop, the SEC is keeping an eye on EU development, which aims to rein in the Wild West that is the cryptocurrency space.” –Kelvin Lester Lee, SEC Commissioner

The Commissioner noted that in their repeated study of fintech regulations, he came to learn and assimilate the steps taken by the EU in regulating cryptocurrency and noted the prevention of money laundering is a crucial aspect.

While acknowledging the rise of cryptocurrency, especially during the pandemic, he also pointed out that it has also increased the potential misuse of it through money laundering and evading conventional anti-money laundering regulations. Lee stressed that the transactions with cryptocurrency happen fast, offering money launderers “increased efficiency and concluding transactions before these are even detected by regulators.”

“Unlike in dealing with traditional financial institutions, cryptocurrency exchange users do not have to identify themselves when transferring assets. Cryptocurrency transactions are often cryptographically secured and identifiable only through a user’s exchange account or crypto wallet address”

SEC Commissioner Kelvin Lee

Citing EU’s countermeasures he emphasized that they mitigated the risks by drafting anti-money laundering measures in the cryptocurrency space by provisionally updating the rules on information accompanying fund transfers by extending the scope of those rules to transfers of digital assets. 

“The rule ensures financial transparency and will provide the EU with a framework compliant with international standards on the exchange of crypto assets on money laundering and terrorist financing. Through enhanced traceability of transfers, the regulation intends to make it difficult to circumvent existing anti-money laundering and terrorist financing regulations. The EU agreed on the urgency of the regulation and decided to align the timetable for its application with that of the markets in crypto assets regulation,” he wrote.

Following this, Lee proudly mentioned that the SEC has already enforced anti-money laundering and anti-terrorist financing regulations as early as 2018 when the Commission issued the 2018 Guidelines on Anti-Money Laundering and Combating the Financing of Terrorism for SEC Covered Institutions or the 2018 AML/CFT Guidelines. 

The guidelines have specified that the SEC must regulate institutions including securities brokers, investment company advisers/fund managers, investment advisors, lending and financing companies, and other entities administering or otherwise dealing in currency, commodities or financial derivatives based thereon, cash substitutes and other similar monetary instruments or property. 

While taking notes with the EU’s development, Lee stated that the SEC is drafting their own measures to create the “best practices in fintech regulation and adopting it in our jurisdiction.”

Last year, the commissioner stressed that the SEC’s focus is to protect the people in regards to the growing cryptocurrency, fintech, and blockchain industry and reminded the public to be cautious when dealing with such entities. (Read more: Commissioner Kelvin Lee: SEC is Merely Emphasizing that the Public be Careful)

Accordingly, the Commission has been actively issuing advisories to warn the investing public against fraudulent entities trying to entice the people with generous crypto offerings. Check out more SEC Advisories here.

On the other hand, Felipe Medalla, the new governor of the Bangko Sentral ng Pilipinas (BSP), stated that he is not keen on regulating cryptocurrency and regarded it as based on the “greater fool theory.” (Read more: Incoming BSP Governor Dismisses Crypto, Not Keen in Regulating)

This article is published on BitPinas: SEC Keeps an Eye on EU Rules on Crypto and AML


Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.

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