Recently, the European Union unveiled a pioneering directive targeting money laundering activities. This regulation forbids all transactions through private cryptocurrency wallets, regardless of the transaction's amount. A major feature of this directive is its focus on boosting KYC processes mechanisms, a crucial step in preventing financial crimes.
Based on Financial regulations from a recent article on Coinatory, the new regulation establishes strict limits for cash transactions, particularly banning any cash transactions exceeding €10,000 and any anonymous cash transactions above €3,000. Additionally, it aims to limit transactions between unregistered digital wallets and official financial institutions, greatly limiting their functionality due to the intrinsic anonymous and permissionless nature of cryptocurrency networks. The regulation demands increased scrutiny over the transfer of cryptocurrency assets and compels crypto enterprises to adopt comprehensive AML measures to combat money laundering. This effort entails an array of organizations, including banking institutions, real estate companies, and crypto firms, to enhance their customer verification mechanisms, working to uncover the actual beneficiaries of legal entities.
EU's groundbreaking regulation signifies a significant transformation in the handling, provision, and exchange of cryptocurrencies within the region. Responding to the impending MiCA regulations affecting stablecoins, leading cryptocurrency exchange OKX has declared it would discontinue USDT trading pairs in the European market, emphasizing the significant effects of these regulations.
These regulations focus on curtailing transactions between private, unregistered crypto wallets and regulated financial entities, substantially reducing their utility owing to the intrinsic anonymous and permissionless nature of cryptocurrency networks. The regulation demands increased scrutiny over the transfer of cryptocurrency assets and obligates crypto enterprises to embrace comprehensive due diligence protocols to combat money laundering, broadening the range of entities obligated to comply and enforcing extensive checks on customer backgrounds.
