The European Union and the European Central Bank wanted to create a unitary legal framework that would limit the anonymity of cryptocurrency transactions, especially in the spectrum of money laundering, terrorist financing and tax evasion. The simplest method of control and probably the only one possible in the case of digital currency transactions is by checking the route of fiat currencies. Any purchase of digital currency with fiat money and vice versa is monitored through exchange providers.
As there is no legal framework in the EU to provide a definition and regulation on digital currencies, digital foreign exchange services and providers of custody wallets, this has materialized with the adoption of the Fifth Anti-Money Laundering and Terrorism Financing Directive, also called 5AMLD — the implementation of additional measures regarding the transparency of financial transactions.
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