US Crypto Week Ignites Money Laundering Fears Across Europe and Asia

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Washington’s highly publicized “Crypto Week” is putting the US digital asset landscape in the global spotlight as lawmakers debate a trio of sweeping legislative proposals. While some in the American crypto industry hail the Digital Asset Market Clarity Act, the GENIUS Act on stablecoins, and the Anti-CBDC Surveillance State Act as overdue, the rest of the world is weighing the potential financial crime implications with mounting concern. Both Europe and Asia, where AML/CFT standards are closely scrutinized and constantly evolving, are watching the US approach for signals that could either strengthen or undermine the global fight against illicit finance.

The timing is significant. As Bitcoin hit a record high, the US political narrative pivoted toward boosting innovation and market competitiveness. Yet, across regulatory capitals in Brussels, Paris, London, Singapore, Tokyo, and Hong Kong, the real question is whether these legislative initiatives adequately address the persistent, evolving risks of money laundering, terrorist financing, and regulatory arbitrage inherent in digital assets.

How US Crypto Laws Stack Up Against European and Asian AML Standards

The European Union has established itself as a regulatory frontrunner with the Markets in Crypto-Assets Regulation (MiCA), which took effect in December 2024. MiCA introduces rigorous licensing, governance, and transparency requirements for crypto-asset service providers (CASPs), and places strong obligations on stablecoin issuers to hold adequate reserves and implement robust AML/CFT controls. The regulation is explicitly aligned with the Financial Action Task Force (FATF) Recommendations, and is coupled with a reinforced AML framework (including the creation of the EU Anti-Money Laundering Authority).

By comparison, the US legislative proposals debated during Crypto Week focus heavily on innovation, market structure, and consumer privacy, but have sparked concern about the relative lack of specific AML/CFT detail in the public drafts. Neither the Digital Asset Market Clarity Act nor the GENIUS Act appears to introduce new, crypto-specific customer due diligence (CDD) or enhanced reporting measures on par with European standards. The Anti-CBDC Surveillance State Act, meanwhile, seeks to preempt any retail central bank digital currency on the basis of privacy—an approach that diverges from Asia’s trend of CBDC experimentation coupled with tight AML monitoring.

This divergence is not lost on global policymakers. European authorities, having moved to unify their crypto-asset rulebook, are wary of competitive gaps that could allow illicit actors to arbitrage between regulatory regimes. Similarly, Asian markets—including Singapore, Hong Kong, and Japan—have integrated digital asset providers within their established AML/CFT frameworks, requiring registration, comprehensive KYC procedures, ongoing monitoring, suspicious activity reporting, and in some cases, travel rule compliance beyond FATF minimums.

Cross-Border Financial Crime and the Risk of Regulatory Arbitrage

The rise of stablecoins and unhosted wallets, combined with the US’s emphasis on market leadership, creates a fertile environment for sophisticated money laundering strategies. Stablecoins pegged to the US dollar are already central to illicit cross-border flows, with their pseudonymous, global reach attracting both criminal organizations and sanctions evaders.

European authorities have flagged persistent challenges stemming from gaps in US enforcement, especially when digital asset service providers are insufficiently supervised or only subject to state-level licensing (as is common in the US). Europol and the European Banking Authority have published repeated risk assessments highlighting the vulnerabilities in cross-jurisdictional flows, particularly involving dollar-backed stablecoins and decentralized finance (DeFi) protocols.

Asian financial centers face similar pressures. The Monetary Authority of Singapore (MAS) and the Hong Kong Monetary Authority (HKMA) have issued explicit warnings on unregulated stablecoin providers, frequently referencing the need for strong global coordination to combat the use of digital assets for money laundering and terrorist financing. Both have adopted licensing frameworks that require real-time transaction monitoring, screening against international sanctions lists, and mandatory reporting of suspicious activities.

A critical risk is that insufficient US AML requirements could undermine progress elsewhere. For example, if a stablecoin issuer licensed under US federal law does not meet the same CDD and reporting obligations as a CASP licensed under MiCA or Singapore’s Payment Services Act, criminals may migrate to the weakest link in the chain, routing illicit funds through US-origin platforms before entering stricter regimes.

Stablecoins, Privacy, and the Global AML Response

The GENIUS Act, which seeks to create a federal framework for payment stablecoins, has been welcomed by some as a move toward regulatory certainty. However, both European and Asian regulators are closely monitoring how reserve management, audit requirements, and AML controls will be enforced in practice. Tether and USD Coin, the world’s largest stablecoins, have both faced allegations of insufficient transparency and inconsistent compliance with global standards. Without watertight AML obligations—such as mandatory KYC on all users, real-time suspicious activity reporting, and on-chain transaction traceability—stablecoins risk amplifying systemic money laundering vulnerabilities.

The US stance on retail CBDCs, reflected in the Anti-CBDC Surveillance State Act, is also at odds with many Asian jurisdictions. China has already piloted the digital yuan with integrated transaction monitoring, while Japan and South Korea are progressing with their own digital currency experiments. These initiatives are viewed as opportunities to enhance financial inclusion and strengthen AML/CFT controls, not as threats to privacy. European authorities have made privacy a cornerstone of the upcoming digital euro, but always within the context of robust AML oversight.

The US legislative pivot away from retail CBDCs, without offering a substitute mechanism for transaction traceability, may weaken the global AML architecture and embolden bad actors seeking less transparent rails for moving illicit funds.

The Future of Global AML: Cooperation or Fragmentation?

The legislative momentum in Washington is being closely dissected by international policymakers and compliance professionals. If the US fails to meet or exceed global AML/CFT standards for digital assets, there is a risk that global anti-financial crime efforts could fragment, undermining recent gains in international cooperation. The Financial Action Task Force (FATF) has repeatedly called on all jurisdictions to adopt the “travel rule” and apply Recommendation 15 to virtual asset service providers. Yet, US implementation has been partial and uneven, particularly at the state level.

The EU’s Anti-Money Laundering Authority (AMLA), expected to be operational by 2026, aims to directly supervise high-risk crypto-asset providers and foster global information sharing. Asian regulators have already established multi-agency task forces and public-private partnerships to detect and prevent crypto-enabled financial crime. In both regions, digital asset innovation is welcomed, but only alongside stringent, harmonized AML/CFT requirements.

Ultimately, the direction set by the US during Crypto Week will reverberate far beyond its borders. The choice between prioritizing innovation and market competitiveness over financial crime controls is a false dichotomy in the eyes of European and Asian regulators. Only through robust, internationally-aligned AML measures can digital assets fulfill their promise without undermining the integrity of the global financial system.

Conclusion: A Call for Transatlantic and Transpacific Alignment on Crypto AML

Washington’s Crypto Week underscores both the promise and the peril of digital asset innovation on a global scale. As the US pursues market leadership and regulatory clarity, the international community remains vigilant against any loosening of anti-money laundering defenses that could be exploited by illicit actors. The path forward demands a commitment to harmonized, technology-neutral AML/CFT standards, rigorous enforcement, and global cooperation. Only by bridging the regulatory gap between the US, Europe, and Asia can policymakers ensure that crypto’s rise does not become the financial crime story of the decade.

Source: Global Government Fintech, by Ian Hall

Some of FinCrime Central’s articles may have been enriched or edited with the help of AI tools. It may contain unintentional errors.

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