European Union lawmakers have approved laws for the regulation of cryptocurrencies.
In a vote on Thursday, members in the EU parliament voted 517 in favor, while 38 voted against passing the Markets in Crypto Act or MiCA regulation, a highly anticipated regulatory framework that will take effect in 2024.
Speaking on this, the European Commissioner for Financial Stability, Financial Services, and Capital Markets Union, Mairead McGuiness said, the union is putting safeguards in place that would prevent companies active on the EU market from engaging in some of the practices that led certain crypto asset operators to collapse.
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“As we have seen in recent months, stringent rules and supervision are very much needed because we’ve had the collapse of projects such as FTX, Terra Luna, Celsius, and Voyager”, she added.
What Does Markets in Crypto-Assets (MiCA) Entail?
The Markets in Crypto Assets (MiCA) is a set of crypto-related regulations intended to close existing EU financial services legislation gaps. The regulatory framework will propose new rules and regulations for certain types of crypto-assets, such as Asset Reference Tokens (ARTs), E-Money Tokens (EMTs), and utility tokens.
Under the new regulation, Crypto-Asset Service Providers (CASPs) will be required to gain registration in one of the bloc’s member states to operate within the EU. These platforms, which include exchanges and portfolio management, will be subject to new rules, including governance and liquidity requirements.
MiCA also introduces new rules prohibiting market abuse related to any crypto-asset transaction or service. This includes unlawful disclosure of inside information, insider trading, and actions that can disrupt or manipulate crypto assets.
It is also worth noting that MiCA imposes restrictions on issuing and using stablecoins. Specifically, the regulation introduces stricter rules for stablecoin issuers due to related concerns about financial stability and monetary sovereignty.
The EU’s new crypto legislation comes as regulators in the US have been seeking to regulate the sector through enforcement actions without providing any regulatory clarity. Many in the crypto industry have welcomed Following the EU’s approach to proposing a clear digital asset sector regulatory framework, many players in the crypto industry have welcomed the decision, while some have expressed concern about the complexity of the rules, with several others noting that it could help restore confidence in the sector.
Binance CEO Changpeng ‘CZ’ Zhao on Thursday disclosed that the recent crypto regulation laws bring to the market clear rules of the game for crypto exchanges, which he describes as a win for Europe.
He wrote via a tweet,
The European Parliament voted for MiCA to be implemented.
This means one of the world’s largest markets is introducing tailored regulations for crypto to protect users and support innovation.
The fine details will matter, but overall we think this is a pragmatic solution to…
— CZ ? Binance (@cz_binance) April 20, 2023
“The fine details will matter, but overall we think this is a pragmatic solution to the challenges we collectively face. There are no clear rules of the game for crypto exchanges to operate in the EU. We’re ready to make adjustments to our business over the next 12-18 months to be in a position of full compliance.”
Also, Koin X, a platform that provides a seamless experience to understand and calculate crypto taxes welcomed the crypto regulation laws. The company disclosed that following the recent collapse of several exchanges, it would help restore the trust that was damaged and bring stability to the sector.
The company wrote via a tweet,
With the recent events in the crypto industry like the collapse of FTX, Celsius Network and Voyager Digital and of the terraUSD stablecoin.
MiCA would help restore the trust that was damaged by the events and bring stability to the sector.
(4/5)
— KoinX (@getkoinx) April 20, 2023
“MiCA, whose main political outlines were agreed upon last year, would allow crypto exchanges and digital-wallet companies to offer regulated services across the bloc and requires stablecoin issuers to hold sufficient reserves.
“With the recent events in the crypto industry like the collapse of FTX, Celsius Network, and Voyager Digital and of the terraUSD stablecoin. MiCA would help restore the trust that was damaged by the events and bring stability to the sector.”