EU Crypto Users May Face Extreme Scrutiny Via New Mandate

In the persistent drive to regulate the cryptocurrency industry and protect investors, the European Union is escalating efforts to adopt a more stringent approach towards digital assets. With the goal of establishing a transparent regulatory framework and combating activities such as money laundering and terror financing, EU lawmakers have introduced a fresh proposal that may alter the dynamics of how individuals across the continent engage with and carry out transactions involving cryptocurrencies.

Stringent Regulations Are Coming

The European Council and Parliament reached a significant provisional agreement on January 17th to revamp the crypto industry in the region, focusing on imposing stricter regulations on firms to target money laundering and terror financing. In a recent statement, the group of policymakers revealed that the proposed regulations would encompass most of the crypto sector, compelling all crypto firms to implement more rigorous due diligence procedures for their customers.

According to the provisional agreement, crypto firms would be required to conduct due diligence when customers plan to execute transactions valued at least $1,100. The initial statement highlighted that the agreement introduces measures to mitigate risks associated with transactions involving self-hosted wallets.

Looking Ahead

While the crypto deal awaits approval by the European Parliament, its potential impact on the industry is substantial. Vincent Van Peteghem, the Belgian Minister of Finance, emphasized that the provisional agreement aligns with the new Anti-Money Laundering (AML) system of the EU, ensuring that fraudsters, organized crime, and terrorists will find no space to legitimize their proceeds through the financial system.

Elsewhere, the EU recently concluded specific AML checks on crypto fund transfers in 2023. MiCA, set to become effective on December 30th, 2024, will establish the first comprehensive crypto regulatory framework for the European Union.