The European Parliament has given its approval to the world’s first comprehensive set of regulations for the cryptocurrency industry. The Markets in Crypto Act (MiCA) received strong support in a vote, with 517 in favor and 38 against. The legislation is designed to enhance consumer protection in the purchase of crypto assets and will hold providers accountable for the loss of investors’ crypto holdings. The regulations will impose several requirements on crypto platforms, token issuers, and traders, focusing on transparency, disclosure, authorization, and transaction supervision.
Under MiCA, platforms must inform consumers about associated risks, and sales of new tokens will be regulated. Stablecoins such as tether and USDC will be required to maintain adequate reserves for possible mass withdrawals. Large stablecoins could be limited to 200 million euros in daily transactions. The European Securities and Markets Authority (ESMA) will gain authority to intervene and restrict crypto platforms that fail to protect investors adequately or threaten financial stability.
MiCA also addresses environmental concerns by mandating firms to disclose their energy consumption and the environmental impact of digital assets. The law’s approval has been praised by European Commissioner for Financial Services Mairead McGuinness, who anticipates that the rules will begin applying next year.
Additionally, the European Parliament passed the Transfer of Funds regulation, which enforces the “travel rule” for cryptocurrency transfers, requiring financial companies to record and share information about the sender and recipient to combat money laundering. Exchanges and self-hosted wallets will need to report transfers exceeding 1,000 euros. This is in line with the EU’s efforts to regulate the crypto market following significant industry failures. The move puts the EU ahead of the U.S. and U.K., both of which are yet to implement formal regulations for the crypto space.
Once the EU laws are in effect, crypto companies can use their licenses in one European country to offer services across member states. This streamlines operations and expansion within the EU for crypto businesses. The U.S. crypto industry has been exploring international expansion due to regulatory uncertainties and challenges in their home country. Companies like Coinbase are prepared for legal battles with regulators and are considering options such as investing abroad or relocating if regulatory clarity isn’t achieved in the U.S.
By FCCT Editorial Team
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