The European Union is about to make waves in the crypto world with the approval of its groundbreaking MiCA regulation. This marks the first time that the industry will be subject to such comprehensive oversight, a crucial move following the downfall of major players like FTX.
Mairead McGuinness, the European Financial Services Commissioner, announced that the legislation will likely be in place by July after approval from all 27 member states. The new rules will be implemented gradually, with stablecoin guidelines set to take effect in 2024.
Major Development In The Field Of Crypto Regulations
MiCA, which has been under development for three years, has been hailed by crypto CEOs as an alternative to the US approach of policing the sector through enforcement proceedings.
Once in effect, MiCA would mandate that any business providing services linked to cryptocurrencies in the EU register in a member state of the union before being permitted to conduct business throughout the union.
The responsibility for ensuring that cryptocurrency platforms abide by the regulations, including having sufficient risk management and governance mechanisms to prevent another FTX-style collapse, will fall to the European Banking Authority and the European Securities and Markets Authority.
What do the Experts Have to Say?
Ernest Urtasun, shadow representative on MiCA and a parliament member for the Greens has noted that the final approval “marks the start of a new era of regulatory scrutiny on unregulated crypto markets, which have caused massive losses to many first-time investors and provided a safe haven to fraudsters and criminal organizations for over a decade.” Yet “important regulatory challenges remain unaddressed and new legislative actions are urgently needed to complete MiCA with the missing pieces.”
“This regulation brings a competitive advantage for the EU,” said Stefan Berger, the lawmaker who steered the rules through parliament.
Comments were made referencing the lack of regulatory clarity in the USA when Berger said “The European crypto-asset industry has regulatory clarity that does not exist in countries like the U.S.”
Further, Mairead McGuinness in a debate on the rules said “I hope that our rules could become a model for other countries.”
MiCA Regulation Implements ‘Travel Rule’ for Crypto to Tackle Money Laundering
To combat money laundering, the EU’s MiCA regulation will apply the international “travel rule” already used in traditional financial transactions to crypto assets. This means that information about the source and recipient of the crypto will have to be shared and stored on both sides of the transfer. The tracing rule also extends to transactions exceeding 1,000 euros from a private user’s “self-hosted” wallet or crypto address.
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