The MiCA regulation is aimed at protecting consumers, safeguarding financial stability, and restoring trust in the crypto-asset industry within the European Union, and ensuring market integrity.
The European Union Parliament has taken a historic step towards comprehensive regulation of the cryptocurrency market, as lawmakers voted 517-38 in favor of the Markets in Crypto-Assets (MiCA) licensing regime. With 18 abstentions, the vote marks a significant milestone, making the EU the first major jurisdiction in the world to introduce such a comprehensive crypto law.
In addition to the MiCA regulation, the European Parliament also voted 529-29 in favor of the Transfer of Funds regulation, aimed at combating money laundering in the crypto industry. With 14 abstentions, this regulation requires crypto operators to identify their customers, adding an additional layer of security and accountability to the sector.
The decision to approve the MiCA regulation follows a spirited debate among lawmakers, who largely supported the introduction of licensing requirements for crypto wallet providers and exchanges operating within the EU. The regulation also mandates that issuers of stablecoins tied to the value of other assets maintain sufficient reserves, further safeguarding the stability and integrity of the market.
Mairead McGuinness, a representative of the European Commission, took to Twitter to describe the vote as a “world first” for crypto rules, emphasizing that the regulations are designed to protect consumers and ensure financial stability and market integrity. McGuinness also revealed that the rules will start applying from the following year, 2024.
In a statement released by the European Parliament, Stefan Berger, the lawmaker who led negotiations on the law, hailed the regulations as a significant milestone, putting the EU “at the forefront of the token economy.” Berger further noted that the regulatory clarity provided by MiCA is lacking in countries like the United States, and that it will help restore trust in the crypto-asset industry, which was damaged by the collapse of FTX.
The European Securities and Markets Authority (ESMA), the EU agency responsible for regulating securities markets, also welcomed the vote and pledged to announce its timetable for drafting secondary legislation under MiCA in due time. However, ESMA also issued a cautionary warning to consumers, highlighting that investing in crypto-assets is still a risky endeavor with limited safeguards at this stage.
The MiCA regulation was initially proposed by the European Commission in 2020, and its passage into law required approval from both the European Parliament and the EU’s Council, which represents the member states of the bloc.
The main provisions of MiCA are set to apply just over 12 months after publication in the EU’s official journal, which is expected to occur in June. This landmark decision by the EU Parliament signals a significant step towards creating a regulatory framework that aims to ensure the responsible and secure growth of the crypto-asset industry within the European Union.