Key Takeaways
- MiCA law allows crypto exchanges and digital-wallet companies to offer regulated services across the bloc and requires stablecoin issuers to hold sufficient reserves.
- The legislation sets guidelines for the operation, structure, and governance of issuers of digital asset tokens.
On 20th April, European Union voted 517-38 in favor of a new crypto licensing regime called the Markets in Crypto-Assets (MiCA). MiCA law would allow crypto exchanges and digital-wallet companies to offer regulated services across the bloc and requires stablecoin issuers to hold sufficient reserves.
The MiCA jurisdiction is set to establish guidelines for the operation, structure, and governance of issuers of digital asset tokens. As part of the new rules, companies operating in the crypto sector will be required to comply to rules covering “transparency, disclosure, authorization, and supervision of transactions.”
The MiCA proposals would apply to issuers of the type of cryptoassets that are in scope of MiCA and firms whose business it is to provide services related to the cryptocurrency referred to as crypto asset service providers (CASPs).
Following the voting, MiCA’s rapporteur and member of the European Parliament, Stefan Bergerlabelled MiCA as “A milestone for the crypto asset industry.”
“Consumers will be protected against deception and fraud, and the sector that was damaged by the FTX collapse can regain trust. Consumers will have all the information they need, and all underlying risks around crypto-assets will have to be monitored“, his quote reads.
Since MiCA has received the parliament approval, now it awaits final approval from the European Council in May before being officially published. MiCA’s rules regarding stablecoins is expected to come into force in July 2024
The European Parliament further voted 529-29 in favor of a controversial anti-money-laundering measure, transfer-of-funds rules, which requires crypto providers to gather details of their users’ identity. The “travel rule” makes it mandatory for firms that allow the transfer of funds to identify and further declare their customers for anti-money laundering/ terrorism financing purposes.
As per the official announcement, “Information on the source of the crypto asset and its beneficiary will have to “travel” with the transaction and be stored on both sides of the transfer.”The announcement further adds that the rules will not apply to person-to-person transfers conducted without a provider or among providers acting on their behalf.
