Nikolas Sargeant
The Economic and Financial Affairs Council of the European Union has approved the Markets in Crypto-Assets (MiCA) regulation. This council includes finance ministers from all member states. The vote was held on May 16, and the regulation was highly-anticipated.
The MiCA bill has been approved by finance ministers from 27 member states. Amendments to various regulations and directives were also made to this new legislation.
The European Parliament adopted two additional pieces of legislation. These included a regulation on information that comes with transfers of funds and certain types of crypto assets. The adoption of these additional laws happened at the same time as MiCA.
On April 20, the MiCA legislation was adopted by the European Parliament. This paves the way for the European Council to approve before the regulatory parameters take effect. The MiCA legislation establishes regulatory guidelines and requirements for using cryptocurrencies and related services and activities across the European Union. The scope of the legislation covers a wide range of cryptocurrencies, digital assets, utility tokens, and stablecoins.
MiCA must be published in the Official Journal of the European Union to proceed to the next step in becoming EU law. It will be effective within a year, making the regulations legally binding by mid-2024.
MiCA was proposed by the European Commission in September 2020, but it has faced obstacles and delays in the legislative process. Cryptocurrency providers and supporters generally support the legislation because it establishes consistent regulatory requirements and operational procedures across Europe. This creates a single market environment in the region.
The MiCA legislation includes registration and authorization requirements for issuers of cryptocurrencies, exchanges, and wallet providers. For stablecoin issuers, there are specific security and risk mitigation requirements to be met. Cryptocurrency custody services must implement appropriate security and safety measures to address possible cybersecurity and operational failures. The legislation also establishes a framework to prevent insider trading, manipulative behavior, and market abuse in the cryptocurrency market.
