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European Parliament Passes New Regulatory Laws for Crypto-Asset Service Providers
The European Parliament has enacted new legislation that mandates stringent monitoring of Crypto-asset Service Providers (CASPs) within the EU. Passed on April 24, the law is designed to enhance consumer safety through improved due diligence and identity verification processes applicable to all relevant entities.
Under this new regulatory framework, part of the Markets in Crypto-Assets (MiCA) regulation, entities like cryptocurrency exchanges are obliged to identify and report any suspicious activities to governmental authorities. MiCA, which was formulated by the European Commission and sanctioned in June 2023, aims to oversee cryptocurrency operations across the European Union, focusing on investor protection and financial stability.
Additionally, the legislation introduces the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA). This new regulatory body, based in Frankfurt, Germany, will ensure the enforcement of these guidelines.
Circle’s EU strategy and policy director, Patrick Hansen, offered insights on the potential impacts of these regulations during a discussion on the social media platform X. He highlighted that CASPs must comply with stringent Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols. Hansen noted that compliance would allow cryptocurrency users to make purchases of goods and services using digital currencies, provided the transactions exceed EUR 1000 (approximately $1072).
The introduction of these regulations could significantly promote the use of cryptocurrencies for microtransactions within the EU. This is a boon for crypto payment companies, such as Strike, which has recently extended its operations to cater to the European market.
Hansen clarified that these requirements align with pre-existing rules. He emphasized that all wallet providers and cryptocurrency exchanges in the EU must adhere to these standards. He also mentioned that earlier drafts of the Anti-Money Laundering Regulation (AMLR) proposed more stringent measures. However, due to concerted industry efforts, a more flexible risk-based approach was adopted.
The directive will officially be ratified by the Council of the EU and come into effect three years following its adoption. Hansen regards the finalized version of the law as a “positive outcome” for the crypto industry, which continues to navigate regulatory uncertainties.
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