EU agrees to deal on landmark MiCA cryptocurrency regulation

EU officials secured an agreement on Thursday on what is likely to be the first major regulatory framework for the cryptocurrency industry.

The European Commission, EU lawmakers, and member states have launched a deal in Brussels after hours of negotiations. The move took place the day after three major EU institutions finalized their actions aimed at eradicating money laundering in cryptocurrencies.

The new rules agreed on Thursday are coming to a cruel time for the digital assets facing Bitcoin. Worst quarter over 10 years..

The crypto asset market, or a breakthrough law known as MiCA, is a lot of the crypto market, including exchanges and issuers of tokens intended to be fixed to existing assets such as so-called Stablecoin, the US dollar. Makes the life of the player difficult.

Stablecoin like Tether And the circle USDC Sufficient reserves must be maintained to meet the redemption request in the event of a large withdrawal. And if it gets too big, it will limit the daily transaction value to 200 million euros.

While EU member states are the main enforcers of the rule, the European Securities and Markets Authority (ESMA) also has the power to ban or limit crypto platforms if it threatens investor protection, market integrity, or financial stability. Has been given.

“Today, we place order in the Wild West of crypto assets, provide legal certainty to crypto asset issuers, guarantee equal rights to service providers, and guarantee high standards to consumers and investors. We will set clear rules for a harmonious market, “said Stephenberger, a member of the Diet who led the negotiations on behalf of the European Parliament.

MiCA also addresses the environmental issues surrounding crypto, and companies need to disclose the environmental impact of energy consumption and digital assets.

Previous proposals have abolished crypto mining, an energy-intensive process for mining new units of Bitcoin and other tokens. However, this was voted against by lawmakers in March.

The rule does not affect tokens that do not have an issuer. BitcoinHowever, the trading platform should warn consumers about the risk of loss associated with trading digital tokens.

Regulators have also agreed on measures to reduce anonymity for certain cryptocurrency transactions.

Authorities are deeply concerned about the misuse of crypto assets to wash fraudulent interests and avoid sanctions, especially after Russia continues to invade Ukraine.

Transfers between exchanges and so-called “unhosted wallets” owned by individuals should be reported when the amount exceeds the 1,000 threshold. This is a controversial issue for crypto enthusiasts who often trade digital currencies for privacy reasons.

Non-fungible tokens (NFTs), which are tokens that represent ownership of digital properties such as art, have been excluded from the proposal. The EU Commission is responsible for deciding whether NFTs need their own regime within 18 months.

The rules are as follows: Collapse of terraUSDThe so-called “algorithm” stablecoin, which tried to maintain the value of $ 1 using a complex algorithm.The blunder is the result Hundreds of billions of dollars It has been wiped out of the entire crypto market.

“The EU is generally not happy with Stablecoin,” said Robert Kopitsch, secretary-general of the European crypto lobbying group Blockchain.

Policy makers have been skeptical of such tokens aimed at being locked into existing assets such as the dollar since Facebook first appeared. Failed attempt to activate own token Authorities were afraid that private digital tokens could ultimately threaten sovereign currencies such as: Euro..

Paolo Ardoino, Tether’s chief technology officer, said the world’s largest stablecoin issuer welcomes clarification of regulations.

MiCA is one of the most progressive initiatives to date, with a focus on driving cryptocurrency innovation and adoption in the European region, said a spokesman.

Circle’s Chief Strategy Officer, Dante Disparte, said the EU framework is an “important milestone.”

“It’s going to encrypt what the GDPR was for privacy,” MiCA said, referring to the groundbreaking EU data protection regulations. Set criteria Similar laws elsewhere in the world, such as California and Brazil.

Overall, MiCA is the first attempt to create a comprehensive regulation of digital assets in the EU. Some of its stricter policies have rattled some crypto companies, but some industry insiders see this move as a positive step and Europe could lead the path to crypto regulation. I believe.

This rule is expected to come into effect as early as 2024. This is a breakthrough in deploying legislation tailored to the crypto market, ahead of both the United States and the United Kingdom.

Patrick Hansen, an advisor to Venture Fund Presite Capital, said:

“Currently, there is a shortage of huge crypto companies in Europe, partly because of fragmentation.”

Coinbase Seeking a license in some European countries Catherine Minarick, vice president of legal affairs for the company, including France, said. She told CNBC that the exchange would be able to “passport” its services to all 27 EU countries under MiCA.