New laws voted by the European Parliament will now subject crypto-asset service providers (CASPs) to government oversight.

New legislation approved by the European Parliament mandate that the government now keep an eye on crypto-asset service providers, or CASPs.

The new law, approved on April 24, aims to enhance consumer "due diligence measures and identity checks". The framework embraces all entities functioning in the jurisdiction, including CASPs.

Cryptocurrency exchanges will be forced to report suspicious actions to the government. The framework is part of the Markets in Crypto Assets (MiCA) regulation.

The European Commission created MiCA last year, and in June 2023 it was permitted to regulate bitcoin assets inside the EU. The objective is to sustain financial stability and safeguard investors.

A new organization known as the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) must also be established in accordance with the new law. The new rules will be implemented under the supervision of the supervising authority, which has its headquarters in Frankfurt, Germany.

Patrick Hansen, director of EU strategy and policy at Circle, clarified the situation on X. He said that CASPSs will have to follow anti-money laundering (AML) and know your customer (KYC) protocols.

Crypto users in the country would be permitted to use these platforms "for buying goods & services with crypto," according to Hansen, if CASPs follow the aforementioned restrictions. The only time this would apply, he said, is if the transaction amount is more than EUR 1000, or roughly $1072.

This move could assist cryptocurrency payment companies like Strike, which recently expanded its services for European consumers, by increasing the amount of microtransactions powered by cryptocurrencies in the EU.

The new rules will cover most of the crypto sector, forcing all crypto-asset service providers (CASPs) to conduct due diligence on their customers. This means that they will have to verify facts and information about their customers, as well as report suspicious activity.