Europe passes landmark crypto regulation
The European Parliament passed landmark crypto regulation, the Markets in Crypto-Assets (MiCA), on 20th April, 2023 becoming one of the world’s leading jurisdictions for crypto asset regulation.
MiCA is a regulatory framework for crypto assets not already covered under existing financial services legislation. The regulation includes provision for consumer and investor protection, addresses financial stability and monetary policy risks as well as measures against market manipulation, money laundering, terrorist financing and criminal activity.
The European Commission first proposed MiCA in 2020, ahead of many other global economies including the US and the UK. The global crypto asset market has existed for some time in a relative regulatory vacuum compared with the existing financial services industry. Many believe that the jurisdiction to lead on regulation, will ensure its position as the world’s leading global hub for crypto assets.
Different countries have had varying approaches to the crypto economy with some like the United Arab Emirates and France bullish, while others including China and Egypt having largely banned the trade of crypto assets. Before the European Parliament’s decision to pass MiCA, businesses had to navigate 27 different crypto regulatory frameworks in Europe.
Meiran Shtibel, associate general counsel at crypto platform, Fireblocks, said: “MiCA marks an important milestone in the global crypto regulatory landscape, as it sets a global point of reference – or a regulatory North Star – for crypto regulation and serves as a crucial model for other jurisdictions.
“The highly anticipated MiCA is the first comprehensive regulatory framework for crypto assets, crypto asset issuers and service providers that will massively impact and revolutionise the industry in the EU, as well as turn a market pool of millions into a single market.
“The introduction of this uniform regulation will also help guide the strategies of EU firms who wish to participate in this market, enabling passporting within the EU and creating a more frictionless European crypto licensing regime,” according to Shtibel.
The passing of MiCA into law has established Europe as a leader in global crypto regulation, according to Janet Ho, head of policy for Europe at crypto research and analysis platform, Chainalysis.
”From now on, the regulatory baton will be passed on to the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA), as well as national competent authorities.
“First, the EBA will need to provide more operational details and guidance on how stablecoins rules are implemented. Early engagement and consultation on this will be crucial to the seamless operation of MiCA, especially given MiCA’s stablecoins rules are some of the toughest. Similar efforts by the ESMA are equally important to give clarity to market players who intend to operate in the EU and comply with the rules.
“While the EBA, the ESMA and the wider industry will still need to maintain stamina to wrap up MiCA, some governments are already starting to consider what the MiCA 2.0 track would look like. For example, addressing some outstanding issues such as DeFi, which is currently excluded from MiCA,” said Ho.
Europe’s landmark regulation comes as calls intensify, in the US, for greater regulatory oversight of the country’s crypto economy following the collapse of crypto platform FTX and stable coins Terra and Luna.
Federal agencies and regulators in the US including the Securities and Exchange Commission, Commodity Futures Trading Commission and the Treasury have all issued rules and guidance for operating within the crypto market but no overarching crypto framework exists.
Article Credit: https://www.verdict.co.uk/europe-passes-landmark-crypto-regulation/