European Union lawmakers have voted to apply AML regulations to crypto, while also requiring ID verification for payers and recipients of any amount of cryptocurrency. The E.U. may also cut off unregulated crypto exchanges from financial systems if they fail to comply.

Why should we care?
It’s helpful to contextualize these latest regulatory moves through the lens of GDPR, the E.U.’s privacy laws. The U.S. hasn’t passed privacy laws as comprehensive as GDPR, but the E.U.’s market size has required companies of all stripes to drastically change how they collect user information—including, in many cases, in the U.S. This same dynamic may play out with cryptocurrency. Crypto exchanges will have to overhaul their ID-verification processes, and they may find it easier to apply these new regulations regardless of geography rather than geofence certain issues to E.U. territory. And the costs of noncompliance are high: Yesterday’s N26 news proves once more that European regulators aren’t afraid to mete out major punishments for failing to comply with AML laws. These new rules may drastically shift how crypto functions in Europe and elsewhere, and may challenge crypto’s role in skirting enforcement mechanisms.