DeFi, DAOs, and NFTs May be Affected by Europe AML Regulations

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A number of revisions proposed by members of the European Parliament for its stance on the anti-money laundering (AML) and counter-terrorism funding (CTF) rules have the possibility of significantly altering Europe’s regulatory environment.

The “Travel” rule, which originally sparked controversy in the market and imposed identification verification requirements on the transfer of money via so-called unhosted wallets, appears to have been eliminated entirely.

New revisions, therefore, broaden the regulation’s application to include those who trade NFTs as well as decentralized autonomous organizations (DAOs), DeFi protocols, and their creators. The metaverse is also being scrutinized as a possible location for money laundering, and suppliers of crypto-asset services may also be required to abide by AML regulations when handling $1000 and higher transactions.

The clauses are the outcome of combining requested adjustments from the Parliamentary factions into compromise modifications, which aim to account for all the viewpoints that have been expressed.

Ahead of the amendments being officially implemented, they still need to pass through a number of hurdles. To be included in the European Parliament assessment on AML regulation, they must first pass a vote. The final report must then be approved by a vote of all the committees of the Parliament in the plenary session. The report will then reflect the Parliament in the subsequent inter-institutional discussions on anti-money-laundering regulations.

Technical discussions regarding the AML assessment are expected until December when the final report on the Parliament’s position is anticipated.

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