European Parliament Approves MiCA Legislation
- 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.
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Lawmakers in the European Parliament have voted strongly in favor of the Markets in Crypto Assets (MiCA) Act, the first comprehensive rules for crypto and crypto asset services providers in the EU.
According to a press release from the Parliament on 20 April, lawmakers voted 517-38 in favor of the MiCA licensing regime, which aims to establish regulatory clarity for cryptocurrencies on the level of the European Union. Once it becomes effective regulation, MiCA will set up guidelines for the operation, structure, and governance of digital asset issuers. Stefan Burger, a leading member of the European Parliament, said in a statement:
“This puts the EU at the forefront of the token economy with 10 000 different crypto assets. Consumers will be protected against deception and fraud, and the sector that was damaged by the FTX collapse can regain trust. Consumers will have all the information they need and all underlying risks around crypto-assets will have to be monitored.”
The Parliament’s lawmakers also voted 529-29 in favor of a different law, known as Transfer of Funds regulation, which will require operators of crypto companies to identify their customers in order to reduce the use of crypto for money laundering.
Introduced back in 2020, the MiCA regime still needs approval from the European Council before it becomes an effective regulation, but once it comes into effect market participants will no longer need to navigate 27 sets of different national rules. The stablecoin-related provisions of MiCA are expected to come into force in July 2024, while all other provisions will apply starting January 2025.
While many have touted MiCA as a “milestone” for the crypto industry, there are certain areas in which the regulation is lacking. While it establishes general rules for crypto and crypto asset service providers, the 400-page document lacks any mention of decentralized finance (DeFi), crypto lending and staking, or the growing non-fungible token (NFT) market.
- 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.
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- The U.S. SEC claimed in its response that it was under no obligation to issue new regulations for crypto, and that rules for crypto were already published and were sufficient.
- The agency also tried to distance itself from any public comments made by its chair Gary Gensler, particularly regarding his statement that most cryptocurrencies are securities.
- The cryptocurrency exchange is estimated to have more than 100,000 creditors, and between $500 million and $1 billion in both assets and liabilities.
- The Chapter 11 filing came less than a month after the U.S. SEC filed charges against Bittrex and its former CEO, claiming they were operating an unregistered securities exchange.