2 - 4 minute read
The European Union (EU) has taken a significant step towards regulating cryptocurrencies, putting the bloc ahead in the race for Web3 technology, according to U.S. House Financial Services Committee Chair Patrick McHenry. The EU’s Markets in Crypto Assets Regulation (MiCA) has been passed, offering a licensing regime for wallet providers, exchanges and stablecoins, set to take effect from 2024. The move puts the EU ahead of the U.S., where equivalent bills have failed to gain political traction. McHenry has criticized the U.S. for running second to Europe on technology deployment, stating that “economic growth comes out of that technology ingenuity.”
Despite criticism from Democrats, McHenry remains optimistic about his bills on stablecoins and crypto market structure. In the meantime, many crypto players have been left operating in a legal gray area. During a hearing last week, McHenry urged Securities and Exchange Commission Chair Gary Gensler to take a clear position on whether individual crypto assets such as ether constitute regulated securities or commodities.
EU officials have urged other leading jurisdictions to follow the lead taken by MiCA to ensure global consistency in protecting investors. Members of the European Parliament have said the law will end the “Wild West” of unregulated crypto and restore confidence lost following the crash of Sam Bankman-Fried’s FTX exchange.
MiCA has also been praised in the UK, with lawmaker Lisa Cameron, who chairs a cross-party grouping on crypto issues, calling it a “significant positive step” towards regulatory clarity and a “useful blueprint” for the UK’s own crypto law.
The Bottom Line
The EU’s new crypto law puts the bloc ahead in the race for Web3 technology, and it has been praised for providing regulatory clarity in the crypto space. The law will offer a licensing regime for wallet providers, exchanges, and stablecoins, set to take effect from 2024. Traders should keep an eye on the impact of the law on the crypto market and consider any potential opportunities or risks that may arise. It remains to be seen how other leading jurisdictions will respond to the EU’s move towards regulating cryptocurrencies, and traders should stay informed of any developments in the global regulatory landscape.
