3 - 5 minute read
The European Union (EU) has taken a major step forward in the regulation of the crypto industry. Lawmakers in the EU have voted in favour of a new regulation, the Markets in Crypto Assets (MiCA), which mandates that crypto wallet providers and exchanges must obtain a license to operate within the bloc. In addition, a separate law known as the Transfer of Funds regulation was approved, which requires crypto operators to identify their customers to prevent instances of money laundering.
The law’s main provisions will start to apply just over 12 months following publication in the EU’s official journal, likely in June. The regulation marks the first of its kind in the world and is expected to set a precedent for future regulatory frameworks of global jurisdictions. The new regulation will “put the EU at the centre of the crypto regulation debate, seven years after the bloc’s regulators virtually banned trading in bitcoin and other cryptocurrencies”.
With the green light given to MiCA, many hope that the EU region will become more appealing to crypto investors and stakeholders that were previously wary due to an unclear regulatory framework. The new laws will provide the necessary guidelines, requirements and protections to traders and investors.
The innovative crypto regulation has received great support in parliament, as demonstrated by the 517-38 vote in favour of MiCA with 18 abstentions, and the 529-39 vote in favour of the Transfer of Funds regulation. Lawmakers believe that the new regulations not only provide clarity and support for the crypto industry, but also require greater transparency in order to prevent fraudulent activities.
The new laws are expected to have implications for the wider crypto market as they will potentially influence other global jurisdictions to follow suit.
✅ I welcome the European Parliament’s vote today to approve comprehensive EU rules on crypto: a world first.
— Mairead McGuinness (@McGuinnessEU) April 20, 2023
The rules will start applying from next year. We’re protecting consumers and safeguarding financial stability and market integrity. pic.twitter.com/cdn58rb9FA
In an interview with CoinDesk, Jesse Powell, CEO of the crypto exchange Kraken, expressed his support: “The EU has always been a pro-innovation regulator and we hope other regulators follow their example by adopting technology-neutral legislation that supports innovation while protecting consumers”.
The Bottom Line
The approval of the Markets in Crypto Assets (MiCA) regulation and the Transfer of Funds regulation marks a significant step forward in the regulation of the crypto industry within the EU. The new laws provide the necessary guidelines and requirements for crypto wallet providers and exchanges operating within the bloc. They will also require greater transparency to prevent fraudulent activities such as money laundering. The regulations are expected to have a positive impact on the wider crypto market as they act as a potential precedent for future regulatory frameworks.
