The European Parliament has passed new laws that will require crypto-asset service providers (CASPs) to be monitored by the government. The goal of the legislation, which was approved on April 24, is to enhance due diligence measures and identity checks for consumers. The framework covers all entities operating in the jurisdiction, including CASPs such as cryptocurrency exchanges. These entities will now be obligated to flag and report any suspicious activities to the government. The new law falls under the broader Markets in Crypto-Assets (MiCA) regulation, which was developed by the European Commission and approved in June 2023 to regulate cryptocurrency assets within the European Union. The aim of MiCA is to safeguard investors and maintain financial stability.
In addition to the new regulations, the law also mandates the creation of a new entity called the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA). Based in Frankfurt, Germany, the AMLA will oversee the implementation of the new regulations.
Patrick Hansen, the EU strategy and policy director at Circle, provided further explanation on the matter, stating that CASPs will be required to adhere to Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures. If CASPs comply with these regulations, crypto users in the EU will have the ability to utilize these platforms for purchasing goods and services with cryptocurrency, provided that the transaction value exceeds EUR 1000 (approximately $1072).
This move has the potential to boost crypto-powered microtransactions in the EU, benefiting crypto payment companies like Strike, which has recently expanded its services for European customers.
It’s worth noting that the requirement mentioned above is already in place through existing regulations. All wallet providers and cryptocurrency exchanges operating in the nation are obligated to comply with these regulations.
Hansen emphasized that the law will be officially adopted by the Council of the EU and will come into effect three years later. He considers the final version of the law to be a positive outcome for the cryptocurrency sector, which has largely operated in a gray area.
Read more: EU securities watchdog: 10 exchanges dominate 90% crypto trades.