EU Lawmakers Approve World’s First Comprehensive Crypto Regulation Framework

By Kevin • April 21, 2023 10:36 am • Comments

The Markets in Crypto Act (MiCA) has been introduced previously as a comprehensive framework for crypto regulation for the EU region.

It was just revealed that lawmakers in the European Parliament have now approved MiCA which makes it the first framework of its kind to be passed into law.

Based on the number of votes, it showed that 517 were in favor while only 38 were against it which indicates that there is overwhelming support for clear crypto regulation guidelines.

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Investors and speculators believe that this will improve crypto investor confidence within the region and attract more institutional capital.

This is due to the fact that MiCA will impose transparency and safety requirements for all crypto businesses within the EU such as forcing providers to be liable if they lose their client’s crypto assets.

CNBC reports:

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 euros ($220 million) in transactions per day.

The European Securities and Markets Authority, or 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.

MiCA also addresses environmental concerns surrounding crypto, with firms forced to disclose their energy consumption as well as the impact of digital assets on the environment.

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.”

As this is the first crypto regulation framework to be passed on a mass scale within the EU, many also expect that other regions around the world will soon follow suit and pass their own regulation frameworks.

This is seen as a necessary step in order for crypto to truly gain mass global adoption.

A director for Ripple, Andrew Whitworth, commented on the passing of MiCA and mentioned that this was an important milestone for the entire crypto industry and will likely fuel future innovation.

Clear regulation guidelines is likely the number one obstacle for growth in many other countries such as the United States and hopefully MiCA can inspire the passing of a similar framework in the US.

BlockWorks.co reports:

MiCA is set to bring crypto businesses — currently operating under what Garcia called “a relatively simple” registration system focused on compliance and anti-money laundering — to a new standard of financial services regulation.

CASPs will be subject to additional governance and liquidity requirements, for example.

“In the development of standards for the regulation of the underlying crypto service provider, the EU has raised the bar, and done this under a single European framework that obviously permits the business and activity of the business to be passported…around the entire EU,” Garcia explained.

Following the EU’s Thursday approval of MiCA — 517 for and 38 against — a formal vote to finalize the MiCA regulation is set for May 16. The regulations are expected to become applicable 12 months to 18 months after that, Sousa said.

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