- The new crypto rules came into effect in the EU today, with a promise to regulate the space, but also with harsh punishments for those who violate them.
- In Austria, for example, any crypto business that fails to register with the FMA and receive a license will be punished with €200,000 fine.
- Meanwhile, custodian wallets and exchanges will also have to disclose the identities of their users, and report suspicious activities.
As countries around the world are finally making a move to regulate crypto space, they also bring rules and regulations for crypto businesses. One of the latest reports from around the world regarding strict regulations comes from Austria.
According to the country’s new law, crypto businesses that operate in Austria have to apply for a special FMA license, due to new AML regulations. In order to actually receive the license, businesses will have to demonstrate the capability, solvency to run the business, and alike.
Should they fail to register with the country’s regulator, the Financial Markets Authority (FMA), they will receive a €200,000 fine. Not only that, but according to the new legal notice also says that businesses have to register issuing selling, transferring, and trading digital currencies, as well as custodian wallets and exchange platforms for them.
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This is also not impacted by whether the coin is exchanged for another crypto, or for fiat currency, or some other payment instrument, and vice versa.
What does the new law mean for the crypto industry?
The new rules come as part of Europe’s new AMLD5 (5th Anti-Money Laundering Directive) which defines digital currencies and qualifies them as financial instruments. So far, this definition was already criticized and named ‘too broad,’ as it covers many assets related to cryptocurrencies, including security tokens.
However, the effects of the new laws were already felt, and many have found them inadequate and too strict. Multiple crypto providers were forced to either cease operations or leave for a jurisdiction that is not covered by these rules. This does not only include Austria but any European country where the rules are applied.
The new rules were originally published in June 2018, and they gave crypto businesses a deadline of January 10th, 2020 to comply, shut down, or leave. Still, while the rules may be strict, they represent the European Union’s first take at regulating digital currency space.
Undoubtedly the biggest problem with the rules is that they are forcing exchanges and custodian wallet providers to disclose the identities of their customers, as well as report any suspicious activity. With the choice to remain anonymous being one of the major aspects that attracted people to crypto in the first place, many do not take the new rules lightly.