EU approves new crypto regulations to enhance due diligence, tackle money laundering
The European Parliament has approved new regulations aimed at increasing due diligence measures and identity checks within the cryptocurrency sector, a significant step intended to combat money laundering activities.
EU’s new due diligence obligations for crypto companies
Approved on April 24, the legislation mandates that crypto-asset service providers (CASPs), including centralized exchanges and other entities like gambling services, implement enhanced customer due diligence measures.
These entities are now required to perform thorough identity checks on their customers and report any suspicious activities to the authorities.
Scope and impact of the MiCA regulation
The new framework falls under the broader Markets in Crypto-Assets (MiCA) regulation, which was developed by the European Commission last year and came into effect in June 2023.
MiCA is designed to govern the operations of cryptocurrency assets within the European Union, aiming to protect investors and ensure financial stability.
Establishment of a new regulatory authority
A significant component of the new regulation is the creation of the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA).
Headquartered in Frankfurt, Germany, AMLA will be responsible for overseeing the implementation of these new regulations, ensuring that CASPs across the EU comply with the stringent due diligence and reporting requirements.
Potential benefits for crypto payment companies
This legislative move could enhance the ecosystem for crypto-powered microtransactions in the EU, potentially benefiting payment companies like Strike, which has recently expanded its services to European customers.
Future enforcement and industry response
The law will be officially adopted by the Council of the EU and is set to be enforced three years later.
The industry’s response to these regulations has been cautiously optimistic, recognizing the benefits of a risk-based approach that avoids the stricter measures initially proposed.
The final version, influenced by significant industry input, aims to balance regulatory oversight with the operational realities of the crypto market.
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