The European Union parliament has approved a new crypto licensing regime, known as Markets in Crypto-Assets (MiCA), making it the first major jurisdiction in the world to introduce a comprehensive crypto law. The EU parliament voted 517-38 in favor of the new legislation on Thursday, with 18 abstentions. The MiCA law requires crypto wallet providers and exchanges to obtain a license to operate across the bloc and stablecoin issuers to maintain sufficient reserves.
The Transfer of Funds regulation, which requires crypto operators to identify their customers to stop money laundering, was also passed by a 529-29 vote, with 14 abstentions.
The European Commission’s Mairead McGuinness, in a tweet, called the vote a “world first” for crypto rules, emphasizing the need to protect consumers and safeguard financial stability, and market integrity. The EU Securities and Markets Authority also welcomed the vote, saying that it would announce its timetable for drafting secondary legislation under MiCA in due time. However, the agency warned consumers that investing in crypto assets remains risky at this stage.
The EU lawmaker who led negotiations on the MiCA law, Stefan Berger, stated in a release that the new regulations would put the EU “at the forefront of the token economy,” adding that the industry could regain trust after being damaged by the FTX collapse.
The Markets in Crypto-Assets regulation was first proposed by the European Commission in 2020 and had to be approved by the EU Parliament and Council, representing the bloc’s member states, to pass into law. The new legislation’s main provisions are set to apply just over 12 months after publication in the EU’s official journal, likely in June,2024.
The approval of the new legislation has been welcomed by the crypto industry, which has long called for regulatory clarity. The new law will create a unified regulatory framework for the industry in the EU, replacing the current patchwork of national rules. It is expected to provide a boost to the European crypto market, which has been trailing behind other regions such as Asia and the US in terms of innovation and adoption.
The MiCA law is also seen as a significant step towards the mainstreaming of cryptocurrencies and digital assets. It is expected to encourage greater institutional involvement in the crypto market, as regulated players such as banks and asset managers would be able to offer crypto-related services with more certainty.
However, some have raised concerns that the new regulations could stifle innovation and competition in the industry. Critics argue that the licensing requirements and other provisions could make it difficult for smaller players to enter the market and compete with established firms.
Despite these concerns, the EU’s move towards a comprehensive crypto law is being seen as a positive development by many in the industry. It is hoped that other jurisdictions will follow suit and introduce similar regulations, providing greater certainty and stability for the crypto market globally.
The EU’s new crypto law is set to come into force in June 2024, giving market participants just over a year to prepare for the new regulatory requirements. The industry will be closely watching the implementation of the new rules, which could have a significant impact on the future of the crypto market in Europe and beyond.