Key Takeaways
- The European Council approved the Markets in Crypto-Asset (MiCA), the comprehensive regulatory framework for the use of crypto in the EU.
- MiCA’s main focus is consumer protection, requiring crypto-asset service providers to register in countries of operation and ensure stablecoin reserves.
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the The European Union Council – the EU’s financial arm – approved the Markets in Crypto-Assets (MiCA) regulations on May 16, a key piece of legislation that will establish a comprehensive regulatory framework for the cryptocurrencies within the borders of the EU.
The Council recently adopted the first ever EU rules on crypto-assets and services markets.
The new regulation aims to improve transparency, preserve financial stability and increase consumer protection while promoting innovation. #DigitalFinanceEU #MiCA
– EU Council (@EUCuncil) May 16, 2023
The MiCA framework was first proposed by the European Commission in 2020, with the legislation formally adopted by the European Parliament in April 2023. After debates and negotiations between EU member states and stakeholders in the crypto industry, the final text of the regulation is AGREES to all members of the European Council on May 16, 2023.
Scheduled to be implemented in 2024, MiCA will establish several requirements for crypto service providers such as licensing, customer due diligence and risk management. The regulations will also create a framework for issuing and trading stablecoins, utility tokens, and other digital assets such as NFTs.
Under MiCA, customer protection is the main focus. Stablecoin issuers must have sufficient reserves to back their fiat-pegged coins in the event of a crash, while crypto-asset service providers must obtain a license from regulators in EU countries. where they operate. This helps provide appropriate security measures and risk protection for customers.
The MiCA framework has been welcomed by some in the crypto industry, who see it as a necessary step to protect investors and promote innovation. Meanwhile, United States SEC Commissioner Hester Peirce DECLARED that “MiCA should serve as a model for us [the United States]” in the Financial Times’ crypto and digital asset summit on May 11, 2023.
Along with MiCA, the European Council will formally vote at the end of May to include tax regulations in the new regulatory framework for crypto. Called the Directive on Administrative Cooperation (DAC8), these additional regulations are an attempt to combating tax evasion from EU residents and providing more surveillance, especially to those who own more than 1 million euros in high-yield assets.
