The European Union has reached a provisional agreement on a sweeping anti-money laundering (AML) regulatory package, marking a milestone with profound implications for the crypto industry. Under this new framework, crypto firms are required to conduct thorough customer due diligence for transactions exceeding 1,000 euros. While generally accepted by the industry, concerns are emerging about the fairness and equity of these regulations in comparison to traditional financial institutions.

The provisional deal, resulting from negotiations between the European Parliament and EU Council, aims to subject crypto firms to stricter regulatory oversight. These new requirements encompass not only enhanced customer verification but also measures targeting transactions involving self-hosted wallets and cross-border transfers.

Despite attempts to ensure parity between crypto firms and banks, some industry insiders, such as Robert Kopitsch from Blockchain for Europe, argue that the playing field is not as level as intended. The discord mainly arises from differing thresholds applied to customer due diligence for crypto service providers compared to other financial entities.

In a notable victory for the crypto sector, non-fungible tokens (NFTs) and decentralized finance (DeFi) appear to have been excluded from the scope of the AMLR. This decision follows vigorous lobbying by industry advocates during the legislative process. However, the fate of privacy-enhancing tools, which have been a contentious issue post the Tornado Cash sanctions, remains uncertain.

Eero Heinaluoma, a member of the European Parliament, emphasized the AMLR's aim to impose identical obligations on crypto asset service providers and credit institutions. However, the reality appears different. Under the new regulations, while all entities must conduct customer checks for transactions exceeding 10,000 euros, the threshold is lower at 1,000 euros for crypto firms and financial institutions.

Despite reservations within the industry, the alignment of AMLR's regulatory scope with MiCA and the TFR is viewed as a significant achievement. As the EU progresses towards finalizing this regulatory package, the crypto sector prepares for rigorous technical discussions and swift adaptation.