{"id":12485,"date":"2025-05-27T14:48:41","date_gmt":"2025-05-27T12:48:41","guid":{"rendered":"https:\/\/wsj-crypto.com\/?p=12485"},"modified":"2025-05-27T14:48:41","modified_gmt":"2025-05-27T12:48:41","slug":"luxembourg-flags-cryptocurrency-service-providers-as-high-risk-entities","status":"publish","type":"post","link":"https:\/\/wsj-crypto.com\/index.php\/2025\/05\/27\/luxembourg-flags-cryptocurrency-service-providers-as-high-risk-entities\/","title":{"rendered":"Luxembourg Flags Cryptocurrency Service Providers as High-Risk Entities"},"content":{"rendered":"

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Luxembourg categorized virtual asset service providers (VASPs) as high-risk entities for money laundering in its 2025 National Risk Assessment (NRA), underscoring worries about the crypto sector\u2019s vulnerability to financial crime.<\/p>\n

According to the report<\/a>, the inherent threat level of VASPs is labeled \u201cHigh,\u201d influenced by elements such as transaction volume, client outreach, distribution channels, legal frameworks, and the global nature of operations.<\/p>\n

The NRA recognized VASPs as an emerging danger in its 2020 report following “a comprehensive evaluation of money laundering inherent risks stemming from virtual assets.\u201d This was succeeded by a 2022 NRA document labeling \u201cthe hazards linked to crypto assets and virtual currencies as extremely high,” since they are, among other reasons, internet-dependent and cross-border.<\/p>\n

Related: <\/strong><\/em>Operators of Blender and Sinbad confront US money laundering accusations<\/strong><\/em><\/a><\/p>\n

EU\u2019s evolving cryptocurrency governance<\/h2>\n

The European Union, of which Luxembourg is a founding nation, has been striving to govern the cryptocurrency arena. A central aspect of this initiative is the Markets in Crypto-Assets (MiCA)<\/a> framework, aimed at standardizing crypto regulation across all 27 EU member countries.<\/p>\n

Since January, crypto asset service providers have begun to obtain licenses to function legally within the EU. In May, the cryptocurrency exchange Kraken initiated regulated derivatives trading<\/a>, while its competitor Crypto.com obtained a license<\/a> permitting it to conduct similar operations.<\/p>\n

MiCA furthermore establishes new criteria for stablecoins. The market leader in stablecoins behind USDt (USDT<\/a>), Tether, declines to adhere to the new regulations<\/a> and was delisted on Crypto.com<\/a>, Coinbase<\/a>, and leading exchange Binance<\/a> on their EU platforms.<\/p>\n

Related: <\/strong><\/em>French authorities investigate Binance for alleged money laundering and fraud: Report<\/strong><\/em><\/a><\/p>\n

Money laundering via cryptocurrency<\/h2>\n

As the significance of cryptocurrencies in the wider financial ecosystem grows, their appeal for money laundering<\/a> also rises. Earlier this month, Hong Kong police apprehended 12 individuals implicated in a cross-border money laundering operation that utilized crypto<\/a> and over 500 fraudulent bank accounts to launder 118 million Hong Kong dollars ($15 million).<\/p>\n

Crypto value received by illicit addresses annually. Source: <\/em>Chainalysis<\/em><\/a><\/figcaption><\/figure>\n

According to reports this month, European law enforcement apprehended 17 individuals linked to a \u201cmafia crypto bank\u201d<\/a> for allegedly laundering over 21 million euros ($23.5 million) in crypto for criminal entities based in the Middle East and China. Consequently, items worth 4.5 million euros ($5 million) were confiscated, including cash, crypto, 18 vehicles, four shotguns, and multiple electronic devices.<\/p>\n

Magazine: <\/strong><\/em>Chinese Tether laundering operation, Bhutan sees a surge in Bitcoin holdings: Asia Express<\/strong><\/em><\/a><\/p>\n