Genesis of the legal status development of virtual asset service providers in the EU

The article explores the history of the development of the legal status of virtual asset service providers (VASPs) in the European Union until the publication of the first draft of the EU Markets in Crypto-Assets Regulation (MiCAR) by the European Commission in September 2020. It examines the early stage of virtual asset regulation in the EU based on the chosen periodization. Special attention is given to the initial research on issues related to virtual assets and European legislative initiatives. Particular focus is placed on the analysis of documents issued by the European Banking Authority, which addressed consumer warnings about the risks associated with virtual currencies, as well as the authority’s efforts to mitigate systemic risks in the European financial system and the evaluation of those risks in connection with the development of the virtual currency market at that time. The article also examines documents from the European Central Bank concerning participants of the so-called “virtual currency schemes”. These schemes include entities such as inventors, issuers, miners, processing service providers, users, wallet providers, exchanges, trading platforms, and other actors. The progression from fragmented research by individual European regulatory bodies to the first pan-European legislative initiative, which aimed to include specific service providers related to the circulation of virtual currencies, particularly custodial wallet providers and services for exchanging virtual currencies into fiat money and vice versa, among the obliged entities for the purposes of prevention of money laundering and terrorist financing. Within this context, the provisions of EU Directives 2015/849 (4AMLD) and 2018/843 (5AMLD) are analyzed, which represent a significant legislative step aimed at strengthening the EU’s framework for combating money laundering and terrorist financing. The reports of the European Securities and Markets Authority (ESMA) and the European Banking Authority, which preceded the publication of the first draft of the MiCA Regulation, are also considered.