publive-imageDeciphering the EU's Stringent Crypto Regulations: Understanding the Motives

The European Parliament has approved a new regulation that imposes due diligence obligations on cryptocurrency companies aiming to combat money laundering. Let’s have a brief discussion about Stringent Cryptocurrency regulations.

The new law aims to improve “due diligence checks” for consumers, which have been extended to firms such as crypto asset managers. These firms are also responsible for reporting suspicious activities to authorities.

Stringent Cryptocurrency regulation law will affect crypto asset service providers (CASPs), such as centralized crypto exchanges under the Markets in Crypto-Assets (MiCA) regulations and various other entities with gambling services, approved on April 24.

MiCA is a regulatory framework introduced by the European Union to regulate digital assets and their markets. It was scheduled for June 2023 and will be fully operational by the end of the year.

A new body, the Anti-Financing of Terrorism and Anti-Money Laundering Authority (AMLA) has been appointed to oversee and monitor the implementation of the new law.

EMLA will have its headquarters in Frankfurt, Germany. However, the regulation has not been formally adopted by the Council and has not yet been published in the EU Office Journal.

Patrick Hansen, director of EU policy and policy at Circle, expressed his optimism about the outcome of the vote in a column on AX. In another post, Hansen said these CASPs will need to adhere to standard Know Your Customer (KYC) and Anti-Money Laundering (AML) processes such as customer due diligence. It is one of the new Stringent Cryptocurrency regulations.

He said the requirements are not new, as all crypto exchanges and custodial wallet providers in the EU are already forced to comply with this rule, which is under existing law.

Hansen described the latest version as a “positive result” for the crypto sector. He said the earlier iterations of the proposed AMLR meant a more stringent approach, which would require a self-manager/beneficiary to implement KYC.

However, he credited industry efforts with advocating for a risk-based approach with multiple options, ultimately leading to a consensus.

Last month, most basic committees of the European Parliament postponed the 1000 euro ($1,080) constraint on cryptocurrency installments from self-hosting crypto wallets as a portion of modern AML regulations. It is one of the new Stringent Cryptocurrency regulations.

Conclusion: The EU’s choice to actualize stricter crypto directions stems from a multilateral approach that aims to adjust development with risk moderation, consumer security, and international participation. Whereas this control can pose challenges for a few crypto market members, they eventually aim to create a secure, transparent, and versatile crypto environment in the EU and in the past.