EU Regulations Shake Up Cryptocurrency Industry
European Union (EU) officials have reached a landmark agreement on a new law that will have profound implications for cryptocurrency issuers and service providers. The agreement, known as the Markets in Crypto Assets (MiCA) framework, establishes a comprehensive regulatory framework for the industry, making the EU the first continent to regulate crypto assets.
Stefan Berger, Member of the European Parliament and rapporteur for the MiCA regulation, announced the agreement on Twitter, describing it as a balanced outcome. The new regulations will cover a wide range of crypto assets, including unbacked crypto assets, stablecoins, trading platforms, and crypto asset wallets.
The French Minister of Economy, Finance, and Industrial and Digital Sovereignty, Bruno LeMaire, hailed the regulations as a decisive step towards ending the wild west of cryptocurrencies. One of the key provisions of the new law is the requirement for stablecoin issuers to establish a sufficiently liquid reserve in order to protect consumers. The reserves must be legally and operationally segregated and isolated, ensuring full protection in the event of insolvency.
Additionally, there will be a cap of €200 million in daily transactions for stablecoins. While some users on Twitter have already criticized the feasibility of these regulations, citing the high daily volumes of stablecoins like Tether and USD Coin, the EU aims to prioritize consumer protection and prevent potential collapses such as the recent TerraUSD incident.
The MiCA regulation also imposes strict requirements on crypto asset service providers (CASPs) to protect consumers. CASPs will need to obtain authorization to operate in the EU and may be held liable if they fail to safeguard investors’ crypto assets. Trading platforms will be held accountable for providing accurate information on tokens, including those without a clear issuer, such as bitcoin.
The regulations also address concerns of market manipulation and insider trading. MiCA will cover various types of market abuse, making it illegal to manipulate the market or use privileged information for personal gain. The European Securities and Markets Authority (ESMA) will supervise the largest CASPs to ensure compliance with the new law.
Although the MiCA framework does not include a ban on proof-of-work technologies or address non-fungible tokens (NFTs), the European Commission will evaluate the risks associated with NFTs over the next 18 months. If necessary, the Commission may propose legislation to address emerging market risks.
Overall, the EU’s new crypto asset policy framework aims to bring stability and regulation to the industry, similar to how the General Data Protection Regulation (GDPR) impacted privacy. The MiCA regulation, once formally adopted after approval by the Council and the European Parliament, may reshape the cryptocurrency landscape in the EU and set a precedent for other regions.
Disclaimer: The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. As with any investment or trading, it is essential to conduct thorough research before making any decisions. The cryptocurrency industry is subject to risks, and caution is advised.
