James Richardson
Luxembourg has identified cryptocurrency service providers as high-risk entities in its recently published 2025 National Risk Assessment (NRA), raising fresh concerns about the sector’s vulnerability to money laundering and financial crime.
The assessment classifies Virtual Asset Service Providers (VASPs) with a “High” inherent risk rating, citing key factors such as transaction volume, customer reach, international exposure, and the complexity of operational models.
This isn’t the first time Luxembourg has flagged crypto services as a concern. The country’s 2020 NRA first mentioned the emerging money laundering risks of virtual assets, and by 2022, the threat level was escalated to “very high” due to their internet-native, cross-border nature.
EU Pushes for Unified Crypto Regulation Through MiCA
As a founding member of the EU, Luxembourg is part of the broader European regulatory push to bring order to the crypto space. The Markets in Crypto-Assets (MiCA) framework aims to standardize cryptocurrency oversight across all 27 EU member states.
Since the start of 2025, crypto firms operating within the EU have begun securing regulatory licenses. For example, Kraken launched a compliant derivatives trading platform, and Crypto.com obtained a license for similar operations, both in the same month.
MiCA also imposes new regulatory standards on stablecoins. As a result, Tether’s USDt (USDT) was removed from platforms like Crypto.com, Coinbase, and Binance within the EU, after the issuer declined to align with the updated compliance rules.
Cryptocurrency’s Growing Role in Global Money Laundering
The use of crypto in illicit finance has grown significantly in recent years. Earlier this month, Hong Kong authorities arrested 12 individuals linked to a $15 million money laundering operation involving over 500 fraudulent bank accounts and crypto transfers.
Meanwhile, across Europe, law enforcement detained 17 people suspected of operating a so-called “mafia crypto bank.” These individuals allegedly laundered €21 million ($23.5 million) for criminal groups in the Middle East and China.
Authorities confiscated €4.5 million ($5 million) worth of assets, including cryptocurrencies, cash, 18 vehicles, firearms, and multiple electronic devices as part of the investigation.
