EU Lawmakers Pass A Comprehensive Framework MiCA for Crypto Regulations
In a vote on Thursday, April 20, the EU lawmakers approved the world’s first comprehensive framework for crypto regulations. The EU parliament voted 517 in favor and 38 against in order to pass the Markets in Crypto Act, or MiCA.
The goal of this legislation is reducing risks for consumers buying digital assets. Besides, these rules also plan to impose a number of requirements on crypto platforms, token issuers and traders over issues of transparency, authorisation, disclosure, and supervision of transactions.
All the platforms will have to inform consumers regarding the risks involved with their operations while the sales of new tokens shall also come under regulation. The comprehensive framework also talks about stablecoins that have been the major source of parking money for crypto investors.
The MiCA framework will require stablecoin issuers to maintain enough reserves to meet the redemptions in the case of mass withdrawals. Furthermore, MiCA will address the environmental concerns surrounding crypto making crypto firms mandatory to disclose their energy consumption and impact of digital assets on the environment.
Mairead McGuinness, European commissioner for financial services, said that he expects the framework rules to start applying from the next year. Furthermore, the European Securities and Markets Authority, or ESMA, shall get powers to step in and ban or restrict the crypto platform in the case that they violate any rules and don’t take enough measures of consumer protection.
Furthermore, the EU Parliament also plans to create a separate law which aims to reduce the anonymity involved in transferring digital assets such as Bitcoin and stablecoins. Here’ financial companies will need to follow the “travel rule” wherein they need to screen, record and communicate information on both - the sender and the recipient, in order to combat the issues of money laundering.
Also, transfers between exchanges and so-called “self-hosted” wallets owned by individuals need to be reported in the case the amount tops the threshold of 1,000-euro.
Popular personalities from the crypto industry extended their support to this legislation. Binance CEO Changpeng Zhao hailed MiCA as a “pragmatic solution to the challenges we collectively face”. He also added that his company was “ready to make adjustments to our business over the next 12-18 months to be in a position of full compliance.”
Andrew Whitworth, EMEA policy director for blockchain firm Ripple, called it a landmark moment. In an email to CNBC, Withworth noted: “Consistency in implementation around the EU will be key in providing crypto companies with the operational clarity to fuel innovation across Europe and guard against unwitting fragmentation of the Single Market”.