The European Parliament voted overwhelmingly in favor of the Crypto Asset Market (MiCA), touted as the most comprehensive framework for cryptocurrency regulation ever created.
Yesterday in Strasbourg, EU MPs formally enacted the 571-page bill after 517 votes in favor, just 38 against and 18 abstentions. MiCA sets out multiple requirements that crypto platforms and token issuers must follow in order to do business within the block.
Cryptocurrency market The law will be passed in 2024. So the 27-nation bloc beat out both the US and the UK in the race to regulate the $1.2 trillion digital asset industry.
Meaning of MiCA
The Markets in Crypto Assets bill will make Europe the first continent to have comprehensive regulation of crypto assets. German parliamentarian Stefan Berger, who led its creation, welcomed its introduction, arguing that “the new supervisory structure will be a bulwark against Lehman Brothers moments like cryptocurrency exchange FTX.”
Among other safeguards, MiCA requires that cryptocurrency platforms inform consumers of the risks associated with their operation. Token sales are also heavily scrutinized, requiring issuers to produce detailed whitepapers for each digital asset they offer.
Interestingly, stablecoin issuers will have to prove they hold sufficient cash reserves in case their assets run wild. In addition, the trading volume per day he will be limited to 200 million euros. The bill calls stablecoins electronic money tokens (EMTs), which are “electronic substitutes for coins and banknotes likely to be used for payment purposes.”
For years, questions have swirled about whether some major stablecoin issuers have sufficient legal reserves. Last month, Circle’s USD Coin (USDC) lost its dollar peg and fell to record lows after announcing it would hold capital in failed Silicon Valley banks. USDC regained Peg a few days later.
The European Securities and Markets Authority (ESMA) is responsible for restricting and banning platforms that violate the consumer protections outlined in the law.
MiCA will primarily address financial concerns, but will also support other long-term EU priorities, including the environment. This means that platforms should disclose their energy consumption and report the impact of their digital assets. In addition, another regulation (money transfers) has come into force, aimed at reducing the anonymity of those who deal with digital assets.
Cryptocurrencies withdrawn from exchanges to self-hosted wallets will be monitored and the platform will be forced to report any amount over €1,000.
Cryptoworld responds to MiCA
Reaction to MiCA’s death has been mixed. “One of the world’s largest markets is introducing regulation tailored to cryptocurrencies to protect users and support innovation.” murmured Changpeng Zhao, CEO of exchange Binance.
“The details are important, but overall we see this as a practical solution to the challenges we face. Clear rules of the game for operating a cryptocurrency exchange in the EU. We are ready to align our business and be fully compliant in the next 12-18 months.”
While U.S. regulators are bogged down in strife for refusing to provide the most basic clarity to the crypto industry, the European Union will provide a comprehensive regulatory framework for European cryptocurrencies. Approved MiCA regulations. Sad to see that the US is…
— Tyler Winklevoss (@tyler) April 20, 2023
Gilbert Verdian CEO Quant networkequally positive, saying, “Ultimately, regulation could be a permanent force, as it is a clear sign that the industry is reaching a much-needed new stage of maturity. It can set the rails in place to foster the development of new and better forms of money while simultaneously protecting consumers and markets.”
Verdian also noted that “NFTs are out of scope, but smaller stablecoins have less burdensome obligations.” Another element of the cryptosphere beyond MiCA’s reach is decentralized exchanges (DEXs) and other fully decentralized protocol.
But not everyone is thrilled with the introduction of formal rules for the crypto sector.One user, Dmitri, Said “US citizens will say, ‘Europe is ahead of the US.’ No, our freedoms are restricted. All transactions on exchanges should be monitored and shared for tax purposes Only fools applaud.”
another claimed The regulation, which “encourages users to use anonymization techniques and use services from other jurisdictions,” said that “the EU seems to be hurting itself.”
UK regulations are expected to be finalized within the next 12 months, according to Economy Secretary Andrew Griffiths. In the US, the situation is less clear and this week Coinbase CEO Brian Armstrong was suggested He may move the exchange’s headquarters as regulatory uncertainty continues.