The Reg3 Split 2024 conference, organized by the Association for Blockchain and Cryptocurrencies (UBiK), was held on Monday at the AC Hotel Split by Marriott. Reg3 Split, which preceded the fifth edition of the BlockSplit conference, focused on regulatory changes in the crypto industry within the European Union.

Key topics included the new Markets in Crypto Assets Regulation (MiCA), the Information accompanying the Transfer of Funds Regulation (TFR), anti-money laundering (AML) frameworks, the Payment Services Directive (PSD), and the regulatory environment of the Western Balkan countries.

The Reg3 Split conference brought together expert speakers for panel discussions discussing the opportunities and challenges within the evolving regulatory environment.

After the opening speeches of the organizers Filip Šaravanja and Nikola Škorić, the conference began with a lecture held by Ivana Poršinsky, senior advisor in the Consumer Protection Monitoring Office of the Croatian National Bank (HNB).

Poršinsky highlighted the dual nature of the cryptocurrency market, noting that while cryptocurrencies are not a new phenomenon, their (un)attractiveness stems from limited public understanding.

She pointed out that this can result in either positive financial gains that attract people to the market or negative consequences such as financial fraud.

Álvaro Garcia, Technical Manager of Transaction Oversight at SumSub, then spoke about the new provisions of the TFR and how crypto-asset service providers (CASPs) can ensure compliance with the regulation.

Garcia also highlighted the thorough verification procedures that TFR imposes intending to prevent illegal activities.

A panel discussion on the regulation of the cryptocurrency market in the EU followed, moderated by Karla Krmpotić from the Hrdalo & Krnić law firm, joined by Morana Vukić-Perak, head of legal affairs and the anti-money laundering department at Electrocoin; Martina Verić from the Croatian Financial Services Supervision Agency (Hanfa); Tamás Katona from the National Bank of Hungary, and Erwin Voloder from the European Blockchain Association (EBA).

The discussion focused on the Regulation on Cryptoasset Markets, or MiCA, which will start to apply on June 30 this year for token issuers, and by the end of the year in full for the rest of the regulation.

MiCA will regulate CASPs and token issuers, which was further explained by Martina Verić. The panelists discussed their national jurisdictions and the implementation of MiCA, noting that in Hungary the competent authority will be the National Bank of Hungary, unlike the split supervision in Croatia between the Croatian Financial Services Supervisory Agency (Hanfa) and the Croatian National Bank (HNB).

Vukić-Perak noted that Croatia made progress in preparing for the MiCA by amending the Law on Prevention of Money Laundering and Financing of Terrorism last year.

She also highlighted the challenges faced by registered CASPs in Croatia and how the existing registration of CASPs will help in harmonizing with MiCA, but there are still reasons for concern in terms of the timeframe for the implementation of the Regulation and possible regulatory ambiguities.

The panel continued by considering the potential opportunities and challenges of MiCA. Erwin Voloder emphasized that MiCA will contribute to regulatory clarity and consistency, which is expected to further stabilize the European and global crypto market and investor confidence in cryptocurrencies.

However, he also pointed out the complexity of applying the rules of the PSD2 directive to electronic money tokens (EMTs), which can still lead to legal doubts in correlation with the MiCA regulation. Based on her experience in traditional finance and coordination with other regulators, Martina Verić emphasized that there will be challenges, but they are ready to face them.

Morana Vukić-Perak then discussed the effectiveness of the existing anti-money laundering (AML) framework and its upcoming changes.

She also noted that the new AML regulation will standardize the framework throughout the EU, which is positive, and the supervision of national authorities by a new independent body, the European Anti-Money Laundering and Terrorist Financing Authority (AMLA) is being established, which should bring easier and faster cooperation of all bodies in the system.

The conference also included a discussion on the regulation of cryptocurrencies in the countries of the Western Balkans, which lawyer Ilija Rilaković moderated. Anina Milanović from the Securities Commission of the Republic of Serbia pointed out that the Serbian legislation is inspired by the Maltese legislation and that it is adapted to new technologies, but in some aspects, it is more restrictive compared to the EU regulations.

In Montenegro, the law on cryptocurrencies is still in the waiting phase, while Albania has had regulations for over a year.

Danilo Gluščević from the Capital Market Commission of Montenegro expressed hope for the adoption of a new proposal based on MiCA soon, while Aldion Baze from the Financial Services Supervisory Agency of the Republic of Albania (AFSA) highlighted the challenge of balancing the anti-money laundering framework with effective regulation markets.

Ilya Volkov, co-founder and CEO of YouHodler, discussed the regulatory environments of the five countries and the implications for global markets, emphasizing the need for local adaptation.

The Reg3 Split conference was concluded with a panel entitled “Life of VASP inside and outside the EU“, with insights from Ilya Volkov from YouHodler (Switzerland), Vadym Hrusha from Trustee (Lithuania), David Veselinović from Crypto 12 (Serbia), and Nikola Klak from of BCX (Bosnia and Herzegovina), moderated by Tomislav Gračan from the Zagreb Stock Exchange (ZSE) and Adria Digital Exchange.

Hrusha noted that the virtual asset service provider market in Lithuania is booming but still under-regulated, while Veselinović and Klak discussed regulatory challenges and successes in their respective regions.

Photo credit: Maja Prgomet / UBiK