European authorities have proposed stricter measures to reduce the risks of abuse in the rapidly expanding digital currency space.

European authorities have proposed stricter measures to reduce the risks of abuse in the rapidly expanding digital currency space.

These measures include imposing a cap on cash payments and transfers with cryptocurrencies where the customer cannot be identified. The European Parliament has voted on this issue, with 99 members supporting the imposition of a cap of 1,000 euros for anonymous payments made with cryptocurrencies, while eight voted against.

The lead negotiator and French Green Party MEP, Damien Carême, clarified that the cap only applies to unregulated wallet providers and unverified wallets, meaning that cryptocurrency payments are not banned.

The new AML rules will also cover DAOs, NFT platforms, and DeFi platforms, requiring them to comply with AML regulations if they are "directly or indirectly controlled by identifiable natural or legal persons, including through smart contracts or voting protocols." This marks a departure from the EU Regulation on Crypto-Assets Markets (MiCA), which treats decentralized platforms as obligated entities, to reduce existing regulatory gaps in the region.

Under the new rules, decentralized platforms will be required to conduct due diligence and report suspicious transactions to authorities, similar to traditional financial institutions and real estate brokers. The regulations are set to be voted on in the European Parliament's plenary in April, with inter-institutional negotiations between the Parliament, Council, and European Commission to finalize the legislation.