MiCA Regulation Approved by EU Finance Ministers

The European Union’s Economic and Financial Affairs Council has given its approval to the Markets in Crypto Assets (MiCA) regulation, which could make the EU the first major jurisdiction in the world to establish a comprehensive licensing regime for crypto.

The council’s finance ministers — representing all 27 member states — voted heavily in favor of the MiCA bill on 16 May, along with amendments to several related regulations and directives. The MiCA legislation, which was formally adopted by the European Parliament on 20 April, covers a wide range of digital assets — including cryptocurrencies, utility tokens, and stablecoins — and aims to establish a unified market environment with regulatory requirements and operational procedures throughout the European Union.

The European Parliament, in conjunction with the adoption of MiCA, has also approved additional legislation addressing the transfer of funds and certain crypto assets, which aim to enhance anti-money laundering efforts in the crypto sector. The EU finance ministers also gave their consent to new measures that will allow tax authorities to collect data on individuals’ cryptocurrency holdings.

Under the provisions of MiCA, crypto firms such as wallet providers and exchanges will be required to obtain licenses to operate across the European Union. Stablecoin issuers will also need to hold suitable reserves, while crypto custody firms must implement robust security and safety measures to mitigate potential cybersecurity and operational risks. The legislation also introduces a framework to prevent market abuse, insider trading, and manipulative behavior within the cryptocurrency space.

While the approval of MiCA represents a significant step forward, the legislation’s journey to becoming EU law is not yet complete, with the next step involving the publication of the bill in the Official Journal of the European Union. Once published, MiCA will be set to come into effect within a year, meaning the regulations will become enforceable sometime in mid 2024.

The introduction of MiCA has been widely welcomed by cryptocurrency service providers and proponents alike as it will establish a single market environment across Europe, ensuring a level playing field for industry participants. By implementing a robust regulatory framework, the European Union aims to enhance trust and stability in the rapidly evolving world of cryptocurrencies.

With the European Union taking a proactive approach to crypto regulation, other jurisdictions around the world are likely to closely monitor the implementation and impact of the MiCA legislation. As the EU sets the stage for a global crypto licensing regime, the regulation could serve as a blueprint for other countries seeking to establish comprehensive frameworks to govern the rapidly growing crypto industry.