European Union officials discussed the Markets in Crypto-Assets (MiCA) bill, which would impose restrictions on unsecured cryptocurrencies and stablecoins, as well as allow the regulation of Crypto-Asset Service Providers (CASP).

European Parliament Tentatively Approves Draft Regulation of Crypto-Assets

According to MEP Stefan Berger, the Council of the EU and the European Parliament have tentatively agreed to pass the MiCA bill. Berger called the agreement the first step toward making the EU “the first continent with crypto-asset regulation.”

Markets in Crypto-Assets (MiCA) is an initiative of the European Commission and contains 126 articles as well as a detailed plan for their implementation in the EU. The bill was introduced in 2020 as part of the digital financial management strategy. MiCA was first put to the vote in March 2022. At that time, members of the Committee on Economic and Monetary Affairs (ECON) voted for its adoption, but the wording to ban cryptocurrencies based on PoW was removed.

The Council of the EU and the European Parliament have agreed that under MiCA, instead of a total ban on cryptocurrencies running on Proof-of-Work, crypto-asset providers will have to provide information on electricity consumption and carbon emissions. For this purpose, the European Parliament approved an initiative to develop regulatory and technical standards for crypto enterprises.

Referring to the recent Terra crash, MEP Ernest Urtasun argues that the MiCA bill has the potential to protect investors in the event of a “cryptocurrency crash.” The basis for this would be:

  1. An agreed European-wide regulation for crypto-asset issuers and service providers, designed to ensure investor safety and support sustainability, as well as reduce market fragmentation and improve legal clarity.
  2. Introducing restrictions on using stablecoins as a means of payment. The daily transaction volume will not exceed €200 million per day.
  3. Mandatory reserves to cover all claims and redemption rights for stablecoin holders.
  4. The European Securities and Markets Authority (ESMA) will be entitled to intervene in the operation of CASPs if they fail to comply with established consumer protection rules.
  5. As part of compliance with the Anti-Money Laundering (AML) rules, CASPs must have a mandatory operating permit and headquarters in the EU.
  6. Providing a white paper for crypto projects will become mandatory, and the ESMA will monitor compliance with the roadmap and the consistency of the information provided.
  7. Introduction of sanctions for insider dealing and market manipulation.

The MiCA bill is still not finally approved by the EU Council and the European Parliament and needs some amendments, that is, it has not been officially adopted. 

Governments of many countries are puzzled by the crypto market regulation. Vietnam, Georgia, South Korea, the U.S., Great Britain, India, China and other countries are working on creating a legal framework for the crypto industry. Cardano co-founder Charles Hoskinson has recently voiced his opinion that the cryptocurrency market needs self-regulation as an alternative to government regulation.

Author: Nataly Antonenko
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