Revolutionary: EU Parliament Approves Comprehensive Crypto Regulation – MiCA Act

• The EU Parliament has passed the Markets in Crypto Act (MiCA) with 517 in favor and 38 against.
• The MiCA is the world’s first comprehensive set of rules aimed at regulating the cryptocurrency industry, which will impose several requirements on crypto platforms, token issuers, and traders.
• The legislation aims to reduce risks for consumers buying crypto assets by holding providers liable if they lose investors’ crypto-assets.
• The EU is a step ahead of the U.S. and the U.K., and the law is expected to take effect from 2024.

The European Union Parliament has approved the world’s first comprehensive package of rules aimed at regulating the cryptocurrency industry. The Markets in Crypto Act (MiCA) seeks to reduce risks for consumers buying crypto assets by holding providers liable if they lose investors’ crypto-assets. The MiCA is the most comprehensive regulatory framework for digital assets to date and will impose several requirements on crypto platforms, token issuers, and traders around transparency, disclosure, authorization, and supervision of transactions.

What are the rules that the MiCA will impose?

The rules will impose a number of requirements on crypto platforms, token issuers, and traders around transparency, disclosure, authorization, and supervision of transactions. The platforms will be required to inform consumers about the risks associated with their operations, while sales of new tokens will come under regulation. Stablecoins like Tether and Circle’s USDC will be required to maintain ample reserves to meet redemption requests in the event of mass withdrawals. Stablecoins that become too large also face being limited to €200 million ($220 million) in transactions per day.

The European Securities and Markets Authority (ESMA) will be given powers to step in and ban or restrict crypto platforms if they are seen to not properly protect investors or threaten market integrity or financial stability. The MiCA also addresses environmental concerns surrounding crypto, with firms forced to disclose their energy consumption and the impact of digital assets on the environment.

How does the Transfer of Funds regulation work?

Parliament also cleared a separate law that aims to reduce the anonymity involved in transfers of cryptocurrencies like bitcoin and stablecoins, voting 529 to 29 to pass the Transfer of Funds regulation. This applies the so-called “travel rule,” which requires financial companies to screen, record, and communicate information on both sender and recipient, to crypto transactions to help combat money laundering. Transfers between exchanges and self-hosted wallets owned by individuals will need to be reported if the amount tops the €1,000 threshold, a contentious issue for crypto enthusiasts who often trade digital currencies for privacy reasons.

Mairead McGuinness, European commissioner for financial services, lauded the law’s approval Thursday and said she expects the rules to start applying “from next year.” The EU is a step ahead of the U.S. and the U.K., and the law is expected to take effect from 2024. Andrew Whitworth, EMEA policy director for blockchain firm Ripple, said the parliamentary blessing marked “an important milestone for the crypto industry around the world.”

Suggested Reading :

• SEC Chair to be Removed by Legislation – Rep. Davidson
• Gensler Receives Powerful Lashes from Congress Majority Whip
• Snoop Dogg Flaunts Custom Gold Ledger Wallet at WrestleMania: Crypto Goes Mainstream
• Revolutionizing IoT Security: VeChain’s Blockchain Patent Set to Transform the Industry
• Florida Governor Moves to Ban CBDC(Central Bank Digital Currency) in the State