The European Union has taken a historic step towards comprehensive regulation of the cryptocurrency industry. The EU Parliament has given the go-ahead for the Markets in Crypto Assets (MiCA) regulation to take effect in 2024, making the EU the first major jurisdiction in the world to introduce such a regime.
EU Parliament votes in favor of MiCA
In a landslide vote of 517-38 with 18 abstentions, EU lawmakers have given their support to the groundbreaking MiCA regulation. This will require crypto wallet providers and exchanges to seek a license to operate across the bloc, and stablecoin issuers to maintain sufficient reserves.
Transfer of Funds regulation passed
In addition to the MiCA regulation, the EU Parliament has also approved the Transfer of Funds regulation, requiring crypto operators to identify their customers to combat money laundering. The vote in favor of this regulation was 529-29 with 14 abstentions.
Reaction to the vote
EU Commission representative Mairead McGuinness hailed the vote as a "world first" for crypto rules and praised the protection it provides for consumers and financial stability. Stefan Berger, the lawmaker who led negotiations on the law, stated that the rules place the EU "at the forefront of the token economy" and will help to restore trust in the industry after the FTX collapse.
What is MiCA and how will it work?
The MiCA regulation was first proposed by the European Commission in 2020 and requires crypto service providers to obtain a license to operate in the EU. This license will be granted by the relevant national authority of each member state. The regulation also establishes a set of rules for stablecoins and defines what qualifies as a "crypto asset" under EU law.
When will the regulation take effect?
The MiCA regulation will start to apply just over 12 months after its publication in the EU's official journal, likely in June. This will give crypto service providers and stablecoin issuers time to comply with the new rules and obtain the necessary licenses to operate in the EU.
