European AML Regulations Follow the US Path With a Six-Years' Delay

As the EU member states transpose the new directive into their national legislation, it will already be over half a decade since cryptocurrency regulation came into force in the U.S. What should we learn from this long-standing experience? And what should we expect from the regulation of the EU market as compared to the U.S.?

Notably, EU member states are free to impose stricter anti-money laundering measures in their national legislation much like the U.S., where states are permitted to impose more stringent regulations as long as they do not conflict with U.S. federal law.

Some of the key differencesDefinitions - Despite the EU and the U.S. following the same approach to regulating crypto, there are some differences, and they start from the definition.

Crypto service providers obtain the status of "Obliged entities" under the Fifth Anti-Money Laundering Directive, or 5AMLD, in the EU, which is equal to "Covered financial institutions" in the U.S. - both definitions have the same purpose, which is to make crypto service providers comply with the established banking rules in each regulatory jurisdiction.

Focus of regulation - 5AMLD covers custodian wallet service providers and crypto-to-fiat exchanges, while the U.S. federal regulatory regime applies to providers exchanging or transmitting crypto regardless of fiat currency involvement.

Interestingly, a crypto service provider may be exempt by local laws in some U.S. states.

To date, no federal privacy or data collection regulation has been enacted in the U.S., although privacy laws have started to appear in some U.S. states.

To the contrary, many in the U.S. have speculated that states will soon follow suit and create a national database that tracks the beneficial ownership of entities.

Cryptocurrency has been regulated in the U.S. under existing money transmitter laws for six years now.

Apart from FinCEN, other U.S. regulators like the Securities and Exchange Commission and the Commodities Futures Trading Commission have sought to bring crypto partially under their jurisdictions.