After years of deliberation and at least two delays, the MiCA regulatory framework regulating the cryptocurrency industry in Europe was voted today. European Union legislators have also passed a separate crypto-related rule known as the Transfer of Funds regulation, which imposes stronger surveillance and identification requirements for crypto operators. It is thought that this MiCA regulation may also affect the cryptocurrency framework in Turkey. Here are the details…
MiCA covers many items in the cryptocurrency space
cryptocoin.com As we have also reported, the MiCA proposal, which regulates the crypto industry and covers the European Union countries, was approved by the European Parliament, with 517 Members of Parliament voting in favor, 38 against and 18 abstaining. The final vote to turn MiCA into law will take place on 16 May at the Council of Europe, with overwhelming approval expected. The regulation establishes a legal framework for the issuance, brokerage and trading of crypto assets, including measures to prevent market manipulation and licensing requirements for service providers.
In addition, MiCA will issue three types of tokens: asset-referenced tokens, e-money tokens and utility tokens. When MiCA goes into effect, crypto-asset service providers will need to obtain authorization from their home country and will have capital requirements ranging from 50,000 to 150,000 euros, depending on the type of service provided. Stablecoins will be strictly regulated under the MiCA.
Has the “end of the Wild West era” come?
The rules were described by European Commission’s Mairead McGuinness as “a world first” as well as “the end of the Wild West era for crypto assets”, according to MP Ernest Urtasun. The laws, which will be implemented at the state level and need to be officially approved by the supra-governmental body called the European Council, are soon to come into force next year.
For many, MiCA represents a crucial step forward for the crypto industry. This is the first major attempt at providing a comprehensive set of rules for crypto companies so they know in advance what they can and cannot do and where their responsibilities lie if they want to operate in the mighty 27-nation trading bloc. The European Union hopes to set the global standard.
Binance CEO supports MiCA
MiCA plans to have crypto firms such as wallet providers and exchanges licensed by the EU. If these companies want to serve EU-based customers, they must comply with money laundering and terrorism financing measures. Some objected to reporting standards that would undoubtedly weaken privacy for crypto users in the name of customer safety and national security. This move brings some welcome transparency and stability, given how regulatory uncertainty has reduced the crypto industry’s ability to grow over the past decade. Binance CEO Changpeng Zhao tweeted his support, describing MiCA as a “pragmatic solution” that his exchange would fit.
Stablecoins have been the main focus of MiCA regulations, and companies issuing stablecoins must meet certain standards and have reserve requirements, including separating reserves from their own assets. MiCA regulations also cover whitepapers that are only available to qualified investors or less than 150 investors, with exemptions for projects where the raised capital is less than €1 million or the crypto asset has been in circulation for at least 12 months before the regulations come into effect. Companies found to violate the new regulations will be subject to heavy fines. MiCA regulations are expected to be adopted by the end of 2024.
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