The European Union is adopting an anti-money laundering bill that includes several requirements for the crypto industry and firms offering services within the EU. This bill will require decentralized autonomous organizations and decentralized finance platforms to comply with anti-money laundering rules if they are "controlled directly or indirectly" by identifiable natural or legal persons.
NFT platforms will also be included under this bill. Credit and financial institutions must apply due diligence measures for crypto transactions worth more than €1,000. Unless the wallet owner is identified, there will be a restriction on transactions of more than €1,000 in value stemming from self-hosted wallets. Anonymous crypto accounts and bank accounts would be prohibited under the regulation, and the Commission will assess whether to prohibit other anonymizing tools in the future.
Cash transactions for commercial payments will be capped at €7,000, with exceptions for interpersonal payments, except for real estate, luxury goods, or deposits into financial institutions. However, policymakers have reverted to the original language, meaning that transaction caps will apply to self-hosted addresses unless the customer or beneficial owner can be identified. The text will still need to pass a plenary vote and enter inter-institutional negotiations, which may provide an opportunity for debate on requirements for commercial crypto payments.
In general, policymakers in the European Parliament are negotiating changes to the text of an EU anti-money laundering bill to include NFT platforms or other companies providing services related to NFTs under the regulation. This differs from the Markets in Crypto-Assets regulation, which intentionally left out NFT platforms. The new language will help mitigate money laundering and terrorist financing risks associated with NFT marketplaces, which the Financial Action Task Force has identified as an "emerging vulnerability." Self-hosted wallets and addresses have also been clarified in the bill, avoiding a full ban on non-custodial services in the EU. The amendments must pass a vote in two parliamentary committees before moving forward for a plenary vote and inter-institutional negotiations.
At the end of this month, the European Union will debate the Markets in Crypto Assets Regulation (MiCA) on April 18, 2023, after lawmakers on the parliament's Economic and Monetary Affairs Committee voted 28-1 in favor of the legislation in October 2022. MiCA would require crypto companies such as wallets and exchanges to meet certain governance and consumer protection norms and introduce reserve requirements for stablecoins. The law's final vote was postponed from November 2022 to February 2023 due to translation issues and now to April 2023. After approval, the law will be published in the EU's official journal and take effect between one and three years later, following the drafting of technical standards by the European Securities and Markets Authority and the European Banking Authority. National regulators will have a say in the law's interpretation and implementation.
It is also important to understand that initiatives and interests for cryptocurrency regulations at the EU level are also coming from decisions and recommendations made by international financial institutions such as the IMF, G20 and FATF which aim to reduce the popularity of cryptocurrencies and to prevent crypto from being recognized as money and legal tenders.
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