New EU MiCA Crypto Regulations: What Has Changed and Why?

Published in: April 26, 2024

• New EU regulations target money laundering, which could affect CASPs.
• The new rules oversee strict measures, including KYC for CASP, to prevent money laundering.

In response to growing concerns around money laundering and illicit activities, the European Parliament on April 24 approved new regulations to combat problems in the cryptocurrency space.

The rules will particularly affect crypto asset service providers (CASP), including centralized exchanges under the Markets in Crypto Assets (MiCA) regulations. MiCA is a regulatory framework introduced by the EU in 2023 to supervise digital assets and their markets.

The latest developments have led to an important question: is the EU banning anonymous crypto transactions or self-custodial wallets?

Patrick Hansen’s ideas

Well, a highlight here is the establishment of a new regulatory body, the Anti-Money Laundering and Terrorist Financing Authority (AMLA), which is tasked with monitoring and enforcing regulations.

To set the record straight around the Anti-Money Laundering Regulations (AMLR), Patrick Hansen, Director of EU Strategy and Policy at Circle, talked about X and https://twitter.com/paddi_hansen/status/1771929862602637788,

“The AMLR is not a crypto regulation.”

He added,

“I’m certainly not a fan of AMLR. For example, I do not agree with lowering the thresholds for cash payments or further restricting the e-money exemption for low-value, low-risk payments.”

This emphasizes that obliged entities (EOs), including financial institutions and crypto asset service providers (CASPs), must adhere to the anti-money laundering and anti-financing of terrorism (AML/CFT) framework.

In addition, non-financial entities such as football clubs or gambling services also fall into the classification of EOs according to the AMLR.

However, the AMLR imposes obligations only on operating companies and service providers, excluding hardware/software providers or self-custody wallets without access/control over cryptoassets.

Additional measures against money laundering

Additionally, according to a press release by the European Union, CASP must apply strict Know Your Customer (KYC) procedures to prevent money laundering.

“The new laws include enhanced due diligence measures and customer identity checks, after which so-called obligated entities (e.g. banks, asset and crypto asset managers or real estate and virtual agents) must report suspicious activities to the FIU and other competent authorities. authorities.”

Criticizing the above sentiment, Hansen https://twitter.com/paddi_hansen/status/1771929868541767907,

“This is nothing new, as all crypto exchanges and custodial wallet providers in the EU are already subject to these obligations under the current AMLD5.”

Way forward

The regulation received strong support, with “479 votes in favor, 61 against and 32 abstentions.” Furthermore, they are expected to be formally adopted by the EU Council.

Despite initial concerns, regulations have scaled back proposals affecting the crypto sector, such as limiting self-custody payments and imposing AML obligations on DAO and DeFi platforms.

Overall, the regulations align closely with existing laws, echoing provisions found in the MiCA regulation.

This is an automatic translation of our English version.