Key takeaways:
- The MiCA law is approved by a unanimous vote of the European Union’s finance ministers.
- The European Parliament also passed two other pieces of legislation besides the MiCA.
The much-anticipated Markets in Crypto-Assets (MiCA) bill was adopted following a vote on May 16 by the Economic and Financial Affairs Council of the European Union, which is composed of the finance ministers of all member states.
Several regulations and directives pertaining to the new legislation and the MiCA bill were approved by the votes of the finance ministers of the 27 member states. Along with the passage of MiCA, the European Parliament also approved two other pieces of legislation, including rules governing the disclosure of information on financial transfers and specific crypto assets.
On April 20, the MiCA Act was formally accepted by the European Parliament, clearing the way for the European Council to give its final blessing before the regulatory standards go into effect.
The Act establishes precise regulatory standards and obligations for using cryptocurrencies and related products and services within the European Union. A variety of cryptocurrencies, digital assets, utility tokens, and stablecoins are included in the law’s coverage.
The measure must be published in the Official Journal of the European Union as the next stage in the lengthy process for MiCA to become EU law. MiCA will take effect in a year, making the regulations officially enacted by the middle of 2024.
The European Commission initially suggested MiCA in September 2020, but it has encountered many roadblocks and delays as it moves through the legislative process.
Given that it provides a uniform market environment across Europe regarding legal requirements and operational processes, cryptocurrency service providers and supporters have generally welcomed the legislation. The registration and authorization requirements for cryptocurrency issuers, exchanges, and wallet providers are essential to MiCA legislation.
While cryptocurrency custody services must offer adequate security and safety measures to address cybersecurity and operational failures, stablecoin issuers must adhere to certain security and risk mitigation criteria. The legislation also offers a framework to stop insider trading, market manipulation, and other bad behavior in the bitcoin field.
Later that day, ministers also approved new regulations requiring cryptocurrency service providers to reveal information about their customers’ holdings to tax authorities to prevent money from being hidden in covert foreign wallets. Valdis Dombrovskis, executive vice-president for an Economy that Works for People, said in a statement:
“Crypto-assets and e-money have great potential to drive economic activity and innovation – but they also carry risks of reducing transparency and enabling tax evasion or fraud. Updating our tax rules to address these issues will help national administrations to collect tax more efficiently and keep up with evolving technology as Europe moves forward with its digital transition,”
The most recent draft of the new tax regulations, known as DAC8, which was based on an OECD model and proposed by the European Commission in December, was made public on Friday. They won’t become legislation just yet because the European Parliament hasn’t provided its advisory opinion.
