- Transfers over €1000 (£880) to be traced
- key provisions for issuing and trading cryptocurrencies
- Binance head approves of the move
MiCA will unify the 27 member states’ cryptocurrency licensing regime under one legal roof, marking what EU commissioner for financial stability Mairead McGuinness called a “world first”.
One of the key aspects of the bill pertains to the controversial realm of stablecoin assets, with customer protection mandates requiring issuers to have sufficient fiat reserves in order to operate.
The bill aims to ensure that crypto transfers above €1000 (£880) will be traced and suspicious activity blocked to safeguard against market manipulation and financial crime.
MiCA will cover crypto-assets that are not regulated by existing financial services legislation and will outline key provisions for issuing and trading cryptocurrencies.
Certain bitcoin and crypto miners will have to disclose their energy consumption as parfait of a push to decrease crypto’s massive carbon footprint.
“This regulation brings a competitive advantage for the EU. The European crypto-asset industry has regulatory clarity that does not exist in countries like the US,” said European Parliament member Stefan Berger.
The bill, which should come into force in the coming months, has been maligned by cryptocurrency users, but institutional players have been largely supportive of the EU’s direction.
“We think this is a pragmatic solution to the challenges we collectively face,” said Changpeng ‘CZ’ Zhao, head of the world’s largest digital asset exchange Binance.
CZ Tweeted: “There are now clear rules of the game for crypto exchanges to operate in the EU. We’re ready to make adjustments to our business over the next 12-18 months to be in a position of full compliance.”
Parliament has endorsed the first EU rules to trace crypto-asset transfers, prevent money laundering, as well as common rules on supervision and customer protection.Press release: https://t.co/t105fHevXz pic.twitter.com/UycXJwDJRF
— European Parliament (@Europarl_EN) April 20, 2023
Alexandre Dreyfus, chief executive of fan-engagement platform Chiliz, said it was “great news for the crypto industry” and a seal of legitimacy for the industry.
The European Parliament voted for MiCA to be implemented.This means one of the world’s largest markets is introducing tailored regulations for crypto to protect users and support innovation.
The fine details will matter, but overall we think this is a pragmatic solution to…
— CZ ???? Binance (@cz_binance) April 20, 2023
MiCA puts the EU in a leading global position to attract Web3 business, at a time when the US’s “regulation-by-enforcement” approach is harming its reputation among industry leaders, including Coinbase (NASDAQ:COIN).
Coinbase head Brian Armstrong said on Tuesday that “the US has the potential to be an important market in crypto, but right now, we are not seeing that regulatory clarity needed", and has hinted at his desire to move the company out of the US.
UK lawmakers are also planning a comprehensive update to existing financial regulations in order to position the country ahead of the US.