EU Cryptocurrency Law Update: Exchanges must track all transactions regardless of amount, Cryptocurrency ATMs also regulated

The European Union has reached a consensus on a specific provision of the cryptocurrency regulation, requiring cryptocurrency exchanges to collect, store, and identify specific information about users' deposits and withdrawals in compliance with anti-money laundering regulations. They must meet regulatory tracking requirements regardless of transaction size.

According to the European Parliament's announcement, the new regulation will have the following impacts:

1. Ignoring Amount Tracking of Fund Flows

Cryptocurrency service providers, like CASP, are obligated to submit user transaction information when requested for investigations to prevent money laundering and terrorism financing. There is no minimum transaction amount, and no minimum exemption amount.

Additionally, according to European Parliament member Ernest Urtasun's statement, cryptocurrency ATMs are also considered as a service provider under CASP.

2. Source Control of Fund Flows

Before withdrawals, CASPs must adopt internal policies and restrictions to verify that the source of cryptocurrency assets is unrelated to sanctions and other restrictive measures, and that there are no risks of money laundering or terrorism financing.

After the MiCA Markets in Crypto Assets regulation is implemented, trading with non-compliant CASPs is prohibited.

3. Non-Custodial Wallets

For non-custodial wallets, when users interact with exchanges like MetaMask, the CASP exchange must record and provide all relevant information. If more than 1,000 euros are sent to one's own MetaMask, the exchange must verify the identity of the wallet owner.

There are no restrictions on transactions between non-custodial wallets. After 18 months of implementation, the committee will evaluate whether further requirements on non-custodial wallets need to be reduced.

Member Ernest Urtasun stated:

We are putting an end to the unregulated, wild-west of the cryptocurrency sector, which will address a major loophole in European anti-money laundering regulations.