EU crypto firms mandated to perform customer due diligence
The European Parliament has passed new laws that will subject crypto-asset service providers (CASPs) to government monitoring. The aim is to enhance due diligence and identity checks for consumers. The legislation covers all entities operating within the jurisdiction, including CASPs like cryptocurrency exchanges. Under the broader Markets in Crypto-Assets (MiCA) regulation, affected entities will be required to flag and report any suspicious activities to the government. MiCA was developed by the European Commission in 2023 to regulate cryptocurrency assets in the European Union, with the goal of protecting investors and ensuring financial stability. The new laws also call for the establishment of a new entity called the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA), which will be headquartered in Frankfurt, Germany. AMLA will oversee the implementation of the new regulations. Crypto-asset service providers will need to adhere to Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures. If they comply with these regulations, crypto users in the EU will be able to use these platforms for purchasing goods and services with cryptocurrency, as long as the transaction value exceeds EUR 1000 (approximately $1072). This move could potentially boost microtransactions powered by crypto in the EU, benefiting crypto payment companies like Strike, which has recently expanded its services for European customers. However, it should be noted that this requirement was already in place through existing regulations, as all wallet providers and cryptocurrency exchanges operating in the nation are required to comply with KYC and AML regulations. The law will be officially adopted by the Council of the EU and will be enforced three years later. According to Circle’s EU strategy and policy director, Patrick Hansen, the final version of the law is a positive outcome for the cryptocurrency sector, which has largely operated in a regulatory gray area.
