New Regulations to Impact Cryptoasset Service Providers in the EU
The European Parliament has passed new regulations aimed at combating money laundering in the crypto industry. Under these regulations, cryptoasset service providers (CASPs), including cryptocurrency exchanges and asset managers, will be required to implement stringent due diligence measures and identity checks. They will also be obligated to report any suspicious activities or potential fraud to the relevant authorities.
The newly approved law, which is set to take effect in June 2023 and be fully enforced by the end of that year, falls under the MiCA regulation. MiCA is a legal framework established by the European Union to ensure the security of digital assets and their markets. To oversee the implementation of these regulations, the Office of Anti-Money Laundering and Combating Financial Terrorism (AMLA) has been established, with its headquarters located in Frankfurt, Germany.
While the law has been debated in the Council, it has not yet been officially adopted or published in the EU official journal. However, EU strategy and policy director at Circle, Hon Patrick Hansen, is confident that the Council will adopt the package, making it effective in three years’ time. Hansen emphasizes that CASPs will be required to adhere to rules such as customer identity checks and anti-money laundering practices, including Know Your Customer (KYC) procedures.
Although this is not the first time that crypto exchanges and custodial wallet providers in the EU have been subject to such regulations, Hansen believes that the changes made to the document are a positive outcome for the crypto industry. He highlights the fact that the initial draft proposed a very strict regime, which would have applied not only to legal entities and founders but also to related operations.
Hansen also acknowledges the valuable input from various industries, which has resulted in a more diverse and flexible approach, ultimately leading to a consensus. In recent months, several committees in the European Parliament have already indicated that the previous limit on payments made from self-hosted crypto wallets will no longer be applicable. These regulations are part of the EU’s ongoing efforts to combat money laundering and the financing of terrorism.