AMLD5, short for the 5th Anti-Money Laundering Directive, is an EU law aimed at tightening rules around money laundering and terrorist financing. 

The big shift? It officially brings cryptocurrencies and crypto service providers—like exchanges and wallet platforms—into the regulatory fold.

Before AMLD5, banks had to follow strict anti-money laundering (AML) rules, but most crypto businesses? Not so much. This directive changes that by holding crypto platforms to the same standards as traditional financial institutions.

Let’s say you’re using a crypto exchange based in Europe. Under AMLD5, that platform now has to verify your identity (through KYC—Know Your Customer) and keep an eye out for anything sketchy, just like a bank would. No more anonymous trading accounts flying under the radar.

What it means for crypto

• More transparency: It’s a lot tougher to use crypto for shady stuff now.
• Legit status: Applying the same rules as banks helps crypto gain credibility in the eyes of regulators and traditional finance.
• Ripple effect: Even though it’s an EU law, it affects global companies that want to operate in Europe—and that’s a lot of them.

Not everyone was thrilled. Some privacy-focused services chose to block EU users instead of jumping through the regulatory hoops. But bigger, more established exchanges mostly adapted—and in doing so, they helped push crypto one step closer to mainstream acceptance.