In a historic move, the European Union has become the first major jurisdiction to introduce a comprehensive crypto law. Lawmakers in the European Parliament voted 517-38 in favor of the Markets in Crypto Assets regulation (MiCA), with 18 abstentions. They also voted 529-29 in favor of the Transfer of Funds regulation, which requires crypto operators to identify their customers to prevent money laundering, with 14 abstentions.
The new regulations require crypto wallet providers and exchanges to obtain a license to operate across the EU. Issuers of stablecoins tied to the value of other assets must also maintain sufficient reserves. The rules will start applying from next year, according to a tweet by the European Commission’s Mairead McGuinness. McGuinness described the vote as a “world first” for crypto rules that would protect consumers and safeguard financial stability and market integrity.
Stefan Berger, the lawmaker who led negotiations on the law, said in a statement released by the European Parliament that the rules put the EU “at the forefront of the token economy.” He added that the European crypto-asset industry now has regulatory clarity that does not exist in countries like the U.S., and that the sector that was damaged by the FTX collapse can regain trust.
The Markets in Crypto Assets regulation was first proposed by the European Commission in 2020. To pass into law, it had to be approved by the parliament and the EU’s Council, which represents the bloc’s member states. Its main provisions start to apply just over 12 months after publication in the EU’s official journal, likely in June.
The move has been welcomed by the crypto industry as a positive step towards greater regulation and legitimacy. It is hoped that the new regulations will provide a framework for the development of the industry, while also protecting consumers from fraud and scams.
However, some critics have raised concerns that the regulations could stifle innovation and limit the growth of the industry. They argue that overly strict regulations could drive crypto businesses out of Europe, and that the rules could be difficult to enforce effectively.
Despite these concerns, the EU’s move towards comprehensive crypto regulation is being seen as a significant milestone in the development of the industry. It is hoped that other jurisdictions will follow suit, providing a global framework for the regulation of crypto assets.
Overall, the introduction of the MiCA regulation marks a significant step forward for the crypto industry in Europe. While there are concerns about the impact of the regulations on innovation and growth, the move towards greater regulation and legitimacy is widely seen as a positive development. The EU’s leadership in this area is likely to be followed by other jurisdictions around the world, as the crypto industry continues to evolve and mature.