European Commission Proposes New Crypto Assets Legislation
- The proposed framework will provide security for investors and issuers in the digital asset space, and allow for a controlled crypto environment.
- The European Commission also proposed a new pilot regime for crypto trading, allowing temporary derogations from existing rules so that regulators can deal with various risks to investor protection.
European Union flags in front of the European Commission building in Brussels, Belgium. Shutterstock
On September 24, The European Commission announced the adoption of a new Digital Finance Package, including multiple legislative proposals on crypto assets and digital resilience.
According to the Commission, the so-called “Regulation on Markets in Crypto Assets”, or MiCA, will boost innovation in the blockchain environment while preserving financial stability and protecting investors from risks.
The new rules are said to provide more legal clarity and certainty surrounding crypto asset issuers and providers, along with safeguards in capital requirements, custody of assets, and rights of the investor against the issuers. Moreover, stablecoin issuers would be subject to more “stringent requirements” in terms of capital, investor rights, and supervision.
The Commission also proposed a new pilot regime for market infrastructures that wish to trade and settle transactions in crypto asset forms, representing the so-called “sandbox” approach, which allows temporary derogations form existing rules so that regulators can gain experience in dealing with distributed ledger technology.
It was also announced that another legislative proposal on digital operational resilience, dubbed DORA (Digital Operational Resilience Act), will ensure that all participants in the financial system have the necessary safeguards in place to mitigate cyberattacks and other malicious activities. The legislation will supposedly require all firms to ensure that they can withstand all types of Information and Communication Technology (ICT)-related disruptions, introducing oversight frameworks for ICT providers.
“Today’s measures will be crucial in supporting the EU’s economic recovery as it will unlock new ways of channeling funding to Europe’s businesses, while also playing a key role in delivering the European Green Deal and the New Industrial Strategy for Europe,” the Commission stated. “By making rules safer and more digital friendly for consumers, the Commission aims to boost responsible innovation in the EU’s financial sector, especially for highly innovative digital start-ups, while mitigating any potential risks related to investor protection, money laundering and cyber-crime.”
If passed, the MiCA will turn the European market into the largest regulated space for cryptocurrencies in the world, with the framework being applicable in 27 member states and giving regulated crypto companies the so-called “passporting rights”, allowing them to safely conduct business across the EU.
- The legislation that aims to create a consistent regulatory framework for crypto assets among the EU member states has been added to the EU’s Official Journal.
- The move has started the clock on when the new crypto rules will be applied, with MiCA coming into full force on 30 December, 2024.
Shutterstock
- The Economic and Financial Affairs Council of the EU, which is comprised of finance ministers of all 27 member states, unanimously approved the MiCA crypto regulation.
- The EU’s finance ministers also also gave their consent to new measures that will allow tax authorities to collect data on individuals’ cryptocurrency holdings.
- Lawmakers in the European Parliament voted 517-38 in favor of the MiCA legislation, which aims to establish harmonized rules for crypto in the EU.
- The crypto regulatory package still needs the approval of the European Council, but it is expected to come into force in 2024.