Luxembourg has warned cryptocurrency establishments against money laundering. The European country made the disclosure through a recent report, highlighting the dangers of virtual asset service providers towards its fight against money laundering.
In the 2025 National Risk Assessment (NRA), Luxembourg warned that cryptocurrency firms are high-risk entities for illegal movement of funds. According to the report, the country established that the crypto sector has a noticeable degree of exposure to financial crime.
As established, factors like transaction volume, market capacity, legal framework, cross-border efficiency, and distribution channels all contributed to the risk. However, Luxembourg’s NRA has always warned against digital assets before now.
In 2020, the NRA described virtual asset providers as emerging risks, giving insight into some potential dangers in the sectors. Thereafter, in 2022, the NRA report said the risks connected to cryptocurrencies are quite high.
More so, Luxembourg through the 2022 report narrated how the cross-border and internet-based posture of the sector made it vulnerable to money laundering. Also, the report mentioned how the fraud relating to cryptocurrencies has remained on a high note.
Luxembourg mentioned that the growing popularity of digital assets in the media contributed to the surge of criminal activities in the industry. Similarly, the NRA stated that the massive increase in the value of cryptocurrencies is another factor.
Luxembourg underlines the need for crypto regulation to combat money laundering
The report went on to emphasize the need for cryptocurrency regulation in combating money laundering in the industry. Luxembourg revealed that unregistered crypto businesses are vehicles of financial crime.
The NRA stressed that the low levels of KYC remain an obstacle militating against cryptocurrency investigations. Meanwhile, the report underlines the regulatory scrutiny against the cryptocurrency sector in the European country.
As a result of the tough regulatory regime, cryptocurrency transactions have been on the decline in Luxembourg. For instance in 2021, licensed cryptocurrency exchanges in the country processed up to 30.2 million transactions worth up to €106.8 billion.
However, in 2023, exchanges in the country only processed 19.7 million transactions worth €22.6 billion. The report highlighted how retail investors made up the population of cryptocurrency users in the country.
It is worth mentioning that the report emanated shortly after Bitstamp obtained a license under the new European Union Markets in Crypto Assets (MiCA) regulatory regime. According to a blog post, the exchange disclosed that it received the key license through the Commission de Surveillance du Secteur Financier of Luxembourg.
Thanks to this approval, Bitstamp will be able to offer cryptocurrency services in the European Economic Area.
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