Monaco’s Legislative Proposal for Cryptocurrency Regulation
The government of Monaco has introduced a legislative proposal aimed at revamping its cryptocurrency regulatory landscape. This initiative, captured in Bill No. 1131, was submitted to the National Council on August 6 and aims to replace the existing regulatory framework from 2022 with a more stringent licensing system for crypto-asset service providers. The proposed adjustments are designed to align Monaco’s regulations with the European Union’s Markets in Crypto-Assets Regulation (MiCA) and the standards established by the Financial Action Task Force (FATF).
Key Changes and Oversight Enhancements
If adopted, this new law would effectively modify significant aspects of the previous Law No. 1.528 implemented in July 2022, thereby enhancing the role of Monaco’s financial authority, the Commission de Contrôle des Activités Financières (CCAF), in the oversight and approval processes for crypto-related firms. These changes emerge amidst escalating scrutiny over Monaco’s anti-money laundering (AML) practices, with the FATF currently categorizing the Principality as a jurisdiction under enhanced monitoring, widely referred to as the FATF grey list. Additionally, the EU has classified Monaco as a high-risk third country concerning AML and counter-terrorist financing measures.
Proposed Licensing Framework
Under the proposed licensing framework, companies looking to deliver regulated crypto services within Monaco would first need approval from the CCAF. This bill aims to clearly delineate the scope of crypto services that can be offered in Monaco, imposing additional mandates focused on corporate governance, risk management, and professional standards. Regulatory assessments would extend beyond service offerings, scrutinizing the operational structure and management of businesses applying for licenses.
Multi-Faceted Review Process
The approval process would involve evaluations from multiple local authorities: the CCAF would oversee compliance with financial security standards; the Autorité Monégasque de Sécurité Financière would review financial security aspects; and the Agence Monégasque de Sécurité Numérique would evaluate cybersecurity compliance. This multi-faceted review process is aimed at bolstering the regulatory environment to combat money laundering and similar illicit financial activities.
Alignment with EU Standards
The reforms outlined in Bill No. 1131 propose a unified authorization approach reminiscent of MiCA, which mandates that EU crypto-asset service providers secure permission prior to operating and adhere to strict governance and client protection protocols. As of this past summer, following the conclusion of MiCA’s transitional arrangements on July 1, more than 3,000 crypto businesses had registered for licensing across Europe, with only a fraction—194—securing full authorization by May 2026, highlighting the increasing regulatory complexities firms face.
Enhanced Supervisory Powers
Beyond regulatory licensing, the bill also stipulates enhanced supervisory powers for the CCAF post-authorization, enabling ongoing oversight of firms to ensure adherence to compliance standards. Following the National Council’s potential approval, further detailed regulations outlining technical and operational requirements for crypto providers would be established. This legislative overhaul is timely as Monaco continues to address international concerns regarding its AML measures, necessitating comprehensive reforms to align more closely with both FATF standards and EU regulations.
Implications of FATF Monitoring
Given the FATF’s ongoing monitoring of Monaco, which it placed on its grey list in June 2024, and the European Commission’s designation of Monaco as a high-risk jurisdiction effective August 5, 2025, this legislative initiative represents a critical step toward reinforcing the regulatory framework surrounding crypto transactions in the Principality. These classifications implicate that entities operating under EU regulations are required to implement enhanced due diligence standards when dealing with jurisdictions on high-risk lists, potentially increasing the operational demands for institutions engaging with these markets.
