The European Parliament approved MiCA guidelines to govern the digital assets market, focusing on money laundering, supervision, and consumer protection. The regulations passed 529-29 and will take effect in 2024.
For the purpose of preventing money laundering, enhancing oversight, and enhancing consumer protection, the European Parliament approved broad regulatory authority to oversee the cryptocurrency business. By a vote of 529 to 29, the Markets in Crypto-Assets (MiCA) rules were approved. In 2024, the regulations will gradually begin to take effect. The MiCA rules represent the biggest effort by governments to regulate the market for digital assets. The EU anticipates that the legislation will serve as a benchmark for other nations around the world. The new regulations should “set a global standard,” according to the EU.
MiCa, which was first proposed in 2020, marks progress on a regulatory front where the U.S. lags. Last year, President Joe Biden issued an executive order directing federal agencies to research the effects on business.
The cryptocurrency crash happened before this. Crash led to high-profile failures, including the Terra project and the FTX exchange. The Securities and Exchange Commission (SEC) conducted a crackdown in response to the crash. Gary Gensler, the SEC chairman, referred to the cryptocurrency market as “The Wild West.” A recent Treasury study focused on illicit financing activity in the decentralized financial sector.
After the collapse of FTX, President of the European Central Bank Christine Lagarde, a major proponent of MiCA, termed them a “absolute necessity” and even proposed a “MiCA II” that would expand upon the current regulation.
What Do and Don’t the New Rules (MiCA) Require?
One of the greatest changes is the ability to track transfers over 1,000 euros ($1,097.55) from decentralized wallets, including those housed on cryptocurrency exchanges, to centralized wallets. Peer-to-peer transfers and transactions without a centralized wallet are exempt from the requirements.
The creation of stablecoins, which it categorizes as “asset-reference and e-money tokens,” will be under the watchful eye of regulators, who will also oversee initial coin offerings to the general public. Customers should be properly informed about the “risks, costs, and charges” associated with their crypto activity, according to lawmakers. Additionally, efforts will be taken to stop money laundering, terrorism financing, and manipulation of the cryptocurrency market.
Companies providing cryptocurrency services would be required to register with at least one EU member state, and compliance would be enforced by regulators including the European Banking Authority and the European Securities and Markets Authority.
Although the MiCA laws cover a wide range of unregulated bitcoin assets, they are not all-inclusive. Assets like non-fungible tokens (NFTs), for example, are exempt from the rules.