Stay informed about the recent unanimous approval of MiCA by EU finance ministers and explore the implications and next steps for the blockchain industry. Get all the essential details here.
Breaking information for the blockchain sector: Recently, the MiCA crypto market regulation was unanimously approved by the finance ministers of the European Union. What will occur after that? Here are all the pertinent details.
EU accepts MiCA as a crypto asset legislation
The law on cryptocurrency markets (MiCA), which was put to a vote on May 16 by the Economic and Financial Affairs Council of the European Union, which is composed of the finance ministers of each member state, was approved as expected.
Specifically, the MiCA bill and revisions to many laws and directives pertaining to the new legislation were supported by finance ministers from 27 member states.
The rule on information accompanying money transfers and specific cryptographic assets were two further pieces of legislation that the European Parliament approved along with the MiCA.
Additionally, on April 20, the MiCA law was formally adopted by the European Parliament, opening the door for final Council approval prior to the enforcement of the regulatory framework.
We can see that the law creates precise regulations and rules for the use of cryptocurrencies, associated services, and related activities across the European Union. A variety of cryptocurrencies, digital assets, utility tokens, and stablecoins are included in the law’s coverage.
However, the bill must be published in the EU’s Official Journal in order for MiCA to proceed to the next stage of becoming EU legislation. The regulations will finally become a law in the middle of 2024 because MiCA will go into effect in less than a year.
What benefits does the MiCA Act offer the cryptocurrency sector?
The MiCA was initially suggested by the European Commission in September 2020, and since then, its legislative progress has encountered several challenges and delays.
However, the legislation’s intent to establish a uniform market environment across Europe in terms of regulatory standards and operational procedures led to it being warmly embraced by bitcoin service providers and supporters alike after that.
The registration and licensing requirements for cryptocurrency issuers, exchanges, and wallet providers are important elements of the MiCA Act.
Furthermore, cryptocurrency custodial services must ensure that there are enough safety and security measures in place to handle any cyber and operational security risks, while stablecoin issuers must adhere to particular security and risk mitigation criteria.
Additionally, the Act offers a framework to stop insider trading, market manipulation, and other bad behavior in the bitcoin field. To put it another way, the major goal of the MiCA law is to reduce the harmful effects of future occurrences that are similar to the FTX insolvency.
Furthermore, there are a number of things to take into account, like scope, when deciding whether a business will be subject to MiCA requirements.
The latter particularly includes operations beyond the scope, such as NFTs subject to European Securities and Markets Authority (ESMA) standards and DeFi subject to European Banking Authority (EBA) guidelines, as well as asset-referenced tokens, e-money tokens, utility tokens, and other activities.
The MiCA’s effects on the market for cryptocurrencies and blockchain in the EU
As is well known, the MiCA law is a big advancement for the European Union’s cryptocurrency market. Before the MiCA, bitcoin businesses in EU member states had to abide by 27 distinct regulatory regimes.
A MiCA license issued in one nation enables businesses to operate in the entire EU bitcoin market because EU-wide laws are applicable under the MiCA. So what are the current repercussions?
First of all, this will make startups in the EU more competitive and may oust uncontrolled rivals from market dominance. The MiCA may also promote increased institutional acceptance and engagement in the EU cryptocurrency and blockchain industry.
According to Patrick Hansen, director of EU strategy and policy at stablecoin issuer Circle, the MiCA would enable licensed enterprises to offer their services in the largest single market in the world, enabling European crypto companies to develop and grow more quickly:
Legal clarity will also foster innovation among financial institutions that were previously reluctant to launch products and services due to regulatory uncertainty.
Furthermore, as MiCA is the first comprehensive regulatory framework for cryptographic assets of one of the world’s leading jurisdictions, it is likely to attract considerable foreign capital and talent to the region.
Co-founder of the decentralized financial initiative Unstoppable financial, Peter Grosskopf, is likewise confident that the MiCA would boost the EU cryptocurrency and blockchain sector.
There is a direct influence on job creation and tax payments since, first of all, businesses outside of Europe will need to register with an organization in the EU.
Second, many governments approach cryptocurrency legislation with an excessive degree of rigidity. According to Grosskopf, the following is true:
For example, the US regulates with enforcement. Compared to other regions, the EU will become a safe space for industry as a whole and innovators from all over the world will start building their businesses here.