EU to scrutinize Bitcoin and crypto payments above €1,000
- The EU Council will issue a new directive requiring crypto firms to report transactions worth over €1,000.
- The rule is intended to limit AML/CFT risk, but may slow crypto adoption in the bloc.
The Council of the European Union – a key EU decision-maker – has agreed on new and stricter anti-money laundering and countering the financing of terrorism (AML/CFT) guidelines for cryptocurrency transactions.
The EU body said in a statement that the new AML directive, called AMLD6, will, among other things, rework the EU’s regulation of the transfer of funds, including in the entire crypto sector.
Under the new rules which are only awaiting adoption after being approved by the EU Parliament, all crypto-asset service providers (CASPs) will be obliged to carry out due diligence on their customers when carrying out transactions of €1,000.
Essentially, CASPs will have to verify facts and information about their customers in such situations. It further noted that the new regulation will introduce specific “enhanced due diligence measures for cross-border correspondent relationships” for CASPs.
Meanwhile, the new regulation will also ban large cash payments above €10,000 ($10,557) in all countries that are part of the bloc. Zbyněk Stanjura, Finance Minister of the Czech Republic, notes that the move is aimed at filling loopholes exploited by criminal individuals and organizations by making it impossible to remain anonymous when buying or selling large amounts of crypto-assets.
Trying to remain anonymous when buying or selling cryptoassets will become much more difficult. Hiding behind multiple layers of corporate ownership will no longer work. It will even become difficult to launder dirty money through goldsmiths or goldsmiths, he said.
In addition, the strengthened rulebook will see the EU use the country classification system of the Financial Action Task Force (FATF) to identify non-EU countries to investigate the risk of money laundering. It says this will build more synergy between the EU and the FATF and prevent the waste of resources through double assessment.
New rules could stifle crypto adoption in the EU
The regulation is similar to anti-fraud laws that have been in place in Spain, an EU member state. The law approved by the Spanish parliament last year sets a maximum limit of €1,000 for cash payments, as well as requiring all Spanish citizens to declare all crypto assets they hold inside or outside the country, as reported by local news agency El Economista at the time.
The Spanish legislation was met with some backlash from crypto market players who feared it could stifle crypto adoption. Similarly, the European Central Bank (ECB) had also previously noted that the cash restriction could undermine cash’s status as legal tender.
