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Ireland’s crypto businesses have become subject to regulatory oversight for the first time, with local digital asset firms now observing anti-money laundering guidelines set out by the European Union, or EU.

The EU’s Fifth Anti-Money Laundering Directive, or 5AMLD, was transposed into Irish Law on April 23, via the Criminal Justice Money Laundering and Terrorist Financing Amendment Act of 2021.

The legislation requires firms that operate with crypto assets and custodial wallet providers — dubbed Virtual Asset Service Providers, or VASPs — and the businesses that service VASPS, abide by the same regulatory standards of mainstream financial firms.

Irish VASPs must now register with the Central Bank of Ireland within the next three months, and carry out due diligence on their clients — including identification, accounting for the origin and destination of their crypto assets, and reporting suspicious financial activity.

Ireland’s prior lack of regulation allowed traders to invest in crypto assets anonymously.

This may be only the beginning for Irish crypto regulation, with all VASPs worldwide that service European countries expected to adhere to the European Union’s Sixth Anti-Money Laundering Directive by June 3. The 6AMLD will require any VASP with European customers to register with EU authorities and meet stringent reporting requirements.

Unlike 5AMLD, the updated guidelines grant European authorities the ability to punish companies and related legal entities, not just rogue employees. VASPs failing to comply with the directive may face heavy fines or closure.