The European Union’s comprehensive array of bolstered regulations for cryptocurrencies received final approval from member states on Tuesday, propelling the 27-nation bloc into a global leadership role in overseeing the unfettered crypto domain.
The package of rules, denoted as Markets in Crypto Assets (MiCA), culminated in adoption by the European Council, marking the conclusive stage of the bloc’s legislative journey. The rules gained endorsement from European Parliament lawmakers in April, with their phased implementation slated to commence in July 2024.
This heightened scrutiny from Europe follows a string of high-profile crypto imbroglios, including the demise of trading behemoth FTX and the unraveling of the TerraUSD stablecoin.
Crafted with the intention of augmenting transparency and thwarting money laundering, the regulations encompass stablecoins, typically tethered to a robust currency or a commodity such as gold to mitigate volatility inherent in conventional cryptocurrencies.
Beyond stablecoins, the rules extend their purview to encompass various digital tokens and services associated with bitcoin, such as trading platforms and digital wallets, though notably excluding bitcoin itself from the regulatory ambit.
Swedish Finance Minister Elisabeth Svantesson, presiding over the rotating presidency of the European Council, underscored the exigency of rules to safeguard European investors and preclude the exploitation of the crypto industry for money laundering and terrorism financing.
Enshrined within MiCA, a product of deliberations since 2020, is the stipulation that crypto enterprises must secure approval to operate within the EU and bear responsibility for any loss incurred by investors. A publicly accessible registry of “noncompliant” companies will be maintained by authorities.
With an overarching goal of preserving financial stability, these regulations proffer provisions to combat market manipulation and insider trading. Companies involved in the issuance or trading of crypto assets will be obligated to disclose comprehensive information regarding risks, costs, and charges confronting consumers.
Noteworthy is the requirement for major crypto entities to divulge their energy consumption, a response to mounting apprehension regarding the substantial energy consumption inherent in bitcoin mining, raising concerns about the carbon footprint of the crypto sphere.
In stark contrast, the United States has made minimal headway in intensifying oversight of cryptocurrencies and digital assets, while the United Kingdom contemplates feedback on crypto regulations outlined in the preceding year.
It is worth mentioning that certain European nations, exemplified by Germany, have already instituted rudimentary regulations pertaining to cryptocurrencies.
