Crypto-asset service providers (CASPs) will now be monitored by the government according to new laws passed by the European Parliament.
Approved on April 24, the new law aims to improve “due diligence measures and identity checks” for consumers. The framework encompasses all entities operating in the jurisdiction and extends to CASPs.
Affected entities, such as cryptocurrency exchanges, will be required to flag and report suspicious activities to the government. The framework falls under the broader Markets in Crypto-Assets (MiCA) regulation.
MiCA was developed by the European Commission last year and approved in June 2023 to govern cryptocurrency assets within the European Union. The goal is to protect investors and maintain financial stability.
The new law also requires the creation of a new entity called the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA). The supervising body, headquartered in Frankfurt, Germany, will oversee the implementation of the new regulations.
EU strategy and policy director at Circle, Patrick Hansen, provided more clarity on the matter on X. He mentioned that CASPSs will be required to adhere to Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures.
If CASPs abide by the above regulations, crypto users in the nation would be able to use these platforms “for buying goods & services with crypto,” Hansen wrote. He added that this would only apply if the transaction value exceeds EUR 1000 (approx $1072).
This move could boost crypto-powered microtransactions in the EU, benefitting crypto payment companies like Strike, which recently expanded its services for European customers.
However, the circle executive clarified that this requirement was already in place via existing regulations. All wallet providers and cryptocurrency exchanges operating in the nation are required to comply with these regulations.
“Previous versions of the proposed AMLR, proposed a way stricter approach that would have meant a KYC on the self-custody originator/beneficiary, but also thanks to industry efforts a risk-based approach with various options was finally agreed on,” he added.
He noted that the law would be officially adopted by the Council of the EU and will be enforced three years later. According to Hansen, the final version of the law is a “positive result” for the cryptocurrency sector, which largely operates in a gray area.