The Lawmakers in the European Parliament have taken a significant initiative by launching the first framework for regulating cryptocurrency in the country. On Thursday, the Markets in Crypto Act (MiCA) was approve by the EU Parliament with 517 votes in favor and 38 votes against. The main objective of this legislation is to minimize the risks associated with the purchase of crypto assets by consumers. In addition, the law will hold providers accountable for any loss of crypto assets belonging to investors.
The regulations will mandate several obligations for crypto platforms, token issuers, and traders. These requirements include transparency, disclosure, authorization, and supervision of transactions.
In a statement released on Thursday, the EU Parliament stated that platforms would obligate to make consumers aware of the risks involved in their operations. Furthermore, the sale of new tokens will be subject to regulation.
Key Points:
- On April 20, 2023, the European Parliament adopted two regulations: Markets in Crypto Assets (MiCA) and Information accompanying transfers of funds and certain crypto-assets (TFR).
- These regulations have passed their final vote and are expected to be published in the Official Journal by the end of June 2023.
- MiCA and TFR will come into force in July 2023.
- The regulation of stablecoins under MiCA will apply from July 2024.
- The remaining provisions under MiCA and TFR will apply from January 2025.
European Authority Granted Powers to Ban Non-Compliant Crypto Platforms
The European Securities and Market Authorities have given all the right to step in and ban all the crypto platforms that do not follow all the security measures or threaten market integrity.
MiCA also addressed the environmental concern because of cryptocurrency and asked all the firms to disclose the energy consumption and the overall impact of digital assets on the environment.
Mairead McGuinness, the European commissioner of financial services, approve laws on Thursday and said that all these laws would be implement from the following year.
Andrew Whitworth, EMEA policy director at Ripple, a blockchain firm, expressed that the approval from the European Parliament was a significant moment for the crypto industry on a global scale.
Whitworth emailed CNBC that maintaining consistency in implementing regulations across the EU is crucial for providing operational clarity to crypto companies. In addition, this consistency will fuel innovation across Europe and prevent unintentional fragmentation of the Single Market.
Furthermore, he added that it is vital to ensure the proportional application of legislation concerning the treatment of different crypto offerings from companies. This must be based on the risk profiles of their activities.
Crypto transfers face increased scrutiny in the EU
The Parliament has approved the Transfer of Funds regulation with an overwhelming majority of 529 to 29. The new law aims to decrease the anonymity of cryptocurrency transfers, including popular ones like Bitcoin and stablecoins.
This also applies to a travel rule, which requires all financial companies to screen, record, and communicate Information on both sender and recipient to crypto transactions for combating money laundering.
The transfer between exchanges or self-hosted wallets owned by individuals needs to report if the amount tops 1000- Euro; it is a contentious issue for crypto enthusiasts who trade digital currencies for privacy reasons.
Changpeng Zhao, the CEO of the world’s largest crypto exchange, tweets that they adjust their business over 12 – 18 months. They would like to be in a position of full compliance.
Binance is already under scrutiny from regulators over how it operates. For example, the Commodity of Futures and Trading Commission has sued Binance for solicitation of US users without permission.
Once Eu law is enacted, crypto companies can use their licenses in European countries to offer their services. As a result, crypto companies have been scrambling to get permits from Authorities and open new offices in anticipation of the law coming into effect.
Final Words
In conclusion, the European Parliament has taken a significant step towards regulating the cryptocurrency industry with the approval of the Markets in Crypto Act (MiCA) and Information accompanying transfers of funds and certain crypto-assets (TFR) regulations.
These regulations aim to minimize risks associated with the purchase of crypto assets by consumers by holding providers accountable for any loss of crypto assets belonging to investors.
Furthermore, the regulations will mandate several obligations for crypto platforms, token issuers, and traders, including transparency, disclosure, authorization, and supervision of transactions.
Approval of these regulations is a significant moment for the crypto industry globally. Maintaining consistency in their implementation is crucial for providing operational clarity to crypto companies, fueling innovation, and preventing unintentional fragmentation of the Single Market.
FAQs
Q: What are MiCA and TFR?
A: MiCA and TFR are two new regulations approve by the EU Parliament to regulate cryptocurrency and address its associated risks.
Q: When will MiCA and TFR come into effect?
A: MiCA and TFR are expected to be published in the Official Journal by the end of June 2023 and will come into force in July 2023. The regulation of stablecoins under MiCA will apply from July 2024, while the remaining provisions under MiCA and TFR will apply from January 2025.
Q: What are the obligations for crypto platforms, token issuers, and traders under MiCA and TFR?
A: The regulations mandate several obligations for crypto platforms, token issuers, and traders, including transparency, disclosure, authorization, and supervision of transactions. In addition, platforms will obligate to inform consumers of the risks involved in their operations, and the sale of new tokens will be subject to regulation.
Q: How will the Transfer of Funds regulation affect cryptocurrency transfers?
A: The Transfer of Funds regulation requires all financial companies to screen, record, and communicate Information on both sender and recipient to crypto transactions for combating money laundering. The transfer between exchanges or self-hosted wallets owned by individuals must report if the amount tops 1000 euros.
