Letter to HM Treasury on 5MLD and Cryptoassets: 30 July 2019

Directive (EU) 2018/843 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (the “Fifth Anti-Money Laundering Directive” or “5MLD”) expands the E.U.’s anti-money laundering regime to include, inter alia, cryptoassets.  HM Treasury in its Consultation on the transposition of 5MLD in the U.K. has asked whether the 5MLD definition is appropriate or it needs to be amended in order to capture the three types of cryptoassets set out in the Cryptoassets Taskforce’s framework.

The FMLC has sent a letter drawing attention to an issue of uncertainty in respect of 5MLD’s definition of virtual currencies.  The definition in 5MLD seems to exclude the possibility of cryptoassets which qualify as money being caught within the regulatory perimeter, and therefore excludes some of the best-known cryptoassets.  In 2016, the FMLC concluded that economically tradeable currencies could indeed qualify as “money” in certain circumstances.

Available as: PDF.