EU Strikes an Agreement on MiCA Legislation to Regulate Crypto Markets
European
Union (EU) institutions and member state representatives reached an agreement
on the Markets in Crypto Assets regulatory proposal. The progress in the
negotiations over the comprehensive legal framework for the crypto space was
made after European officials agreed to adopt a set of anti-money laundering
rules for cryptocurrency transactions earlier this week.
Deal to Tame the ‘Wild West’ Crypto Market
Representatives
of the major institutional bodies of the European Union agreed to implement the
landmark Markets in Crypto Assets (MiCA) legislation across the 27-strong bloc.
It will also introduce licensing for crypto companies and safeguards for their
customers. The agreement follows a consensus on anti-money laundering
regulations for cryptocurrencies.
The deal is
backed by the European Parliament, the Commission, and the Council, the three
participants in the EU’s complex legislative process. MiCA will now need the
approval of the Parliament and the governments of individual states to become a
law. The breakthrough in the talks was announced on social media by
Stefan Berger, the rapporteur for the package.
"Europe
is the first continent with crypto-asset regulation," Berger exclaimed in
a tweet while pointing out that a controversial proposal to ban
technologies such as energy-intensive proof-of-work (PoW) mining is not part of
the latest draft. Quoted by Reuters, the German lawmaker who led the negotiations
also stated:
"Today
we put an order in the Wild West of crypto-assets and set clear rules for the harmonized market. The recent fall in the value of digital currencies shows
us how highly risky and speculative they are and that it is fundamental to
act."
Crypto
markets slumped this year, following last month’s collapse of
the terrausd (UST) stablecoin and serious problems at major crypto firms
like Celsius Network, 3AC, and Voyager Digital. Bitcoin (BTC),
the cryptocurrency with the largest market cap, has lost 70% of its value since
peaking at a record high in November.
MiCA to Improve Customer Protection
The important
regulation confirms the European Union’s role as a standard-setter for digital
issues, the EU said. MiCA will give crypto issuers and providers of related
services a "passport" to serve clients across the Union while
obliging them to meet "strong requirements to protect consumers’ wallets
and become liable in case they lose investors," a statement explained.
The
stablecoin holders will be provided with the security of a free-of-charge
claim. Many across the industry see the steps, such as the Blockchain for
Europe lobby group, leading to a situation in which "stablecoins will
basically have no way to be profitable."
The agreement
excludes non-fungible tokens (NFTs), "except if they fall under existing
crypto-asset categories." Authorities in Brussels will now have 18 months
to decide if separate regulations are needed for them.
National
regulators will be responsible for issuing licenses to crypto businesses. They
will also report to the European Securities and Markets Authority (ESMA)
regarding the approval of large operators.
The latter
has been tasked with developing standards for crypto companies to disclose
information regarding their environmental and climate footprints, a compromise
arrangement allowing the scrapping of the idea to ban the provision of services
for PoW coins.
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