NFT Platforms Should Be Subject to Money-Laundering Regulation, EU Lawmakers Say

The rules would cover self-hosted wallets and DeFi apps.

AccessTimeIconJul 4, 2022 at 4:49 p.m. UTC
Updated May 11, 2023 at 3:39 p.m. UTC
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NFT (non-fungible token) trading platforms should be made subject to European Union anti-money laundering (AML) laws, members of the European Parliament said in proposed amendments to the legislation published Monday.

Lawmakers from the Green Party and Socialist representatives also appear to favor including self-managed crypto wallets and decentralized finance under a proposed regulation on money laundering.

Last week, the bloc provisionally agreed on new laws known as the Markets in Crypto Assets Regulation (MiCA) that would license crypto companies and impose identity checks on transactions. But the European Commission was keen to leave detailed money-laundering procedures for a wider overhaul that also covers sectors such as banking.

An amendment to those laundering laws proposed by the Green Party’s Ernest Urtasun and Kira Marie Peter-Hansen, alongside Socialists Aurore Lalucq and Csaba Molnár, seeks to make NFT platforms – anyone who acts as an intermediary for importing, minting or trading the assets that represent proof of ownership of artworks or collectibles – “obliged entities” under EU money-laundering law, according to the document dated June 22.

That would mean that the likes of NFT marketplace OpenSea might have to assess the risk of illicit finance flowing through their systems and carry out identity checks on new customers and suspicious transactions, on par with what other entities like banks, real estate agents, art traders and other crypto providers do.

Further amendments by Urtasun, Peter-Hansen, Lalucq and Dutch lawmaker Paul Tang seek to use the law to impose laundering checks on decentralized autonomous organizations and “unhosted wallets” that aren’t managed by any regulated crypto provider. An attempt to do so via MiCA and a parallel set of rules known as the Transfer of Funds regulation was largely abandoned following opposition from EU member governments.

Another change, which was proposed by Gunnar Beck of the right-wing Alternative for Germany party, seeks to protect cryptocurrencies from the effects of the law, saying cryptos “make it possible for people to diversify their portfolio and protect themselves from risks of [European Central Bank]-induced euro inflation."

The EU is looking to overhaul its money-laundering framework, including by setting up a new agency to control lenders, after a string of scandals in the conventional financial sector that involved the likes of Denmark’s Danske Bank and Malta’s Pilatus Bank.


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Jack Schickler

Jack Schickler is a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He doesn’t own any crypto.

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