European Union officials have hammered out the final words for their landmark cryptocurrency legislation, paving the way for a Europe-wide approach to cryptocurrency regulation. The Czech ambassador to the EU, Edita Hrda, said that the EU ambassadors meeting approved the full legal text of the Markets in Crypto Assets Regulation (MiCA) on the 5th.
In a letter to Irene Tingali, head of the European Union’s economic and monetary affairs committee, Hulda said the European Parliament and the European Council should be able to get the first reading of the regulatory law through parliament.
European Union officials have hammered out the final words for their landmark cryptocurrency legislation, paving the way for a Europe-wide approach to cryptocurrency regulation. The Czech ambassador to the EU, Edita Hrda, said that the EU ambassadors meeting approved the full legal text of the Markets in Crypto Assets Regulation (MiCA) on the 5th.
In a letter to Irene Tingali, head of the European Union’s economic and monetary affairs committee, Hulda said the European Parliament and the European Council should be able to get the first reading of the regulatory law through parliament.
EU policymakers agreed on the legislative package in June after two years of back-and-forth discussions .
Effective as soon as 2024
In its current form, the regulatory framework would require any entity seeking to issue a cryptocurrency to publish a ” crypto asset white paper” containing information about the project. Another law on money transfers requires wallet providers to check the identities of their customers to reduce money laundering.
At the same time, issuers of stablecoins must also comply with specific capital requirements. This means that token issuance projects must hold reserves proportional to their token issuance to support the value of their tokens, although local governments can increase the amount of capital required depending on the level of risk they judge.
The text of the law will now be sent to the European Parliament, pending a vote, which could be published in the EU’s Official Gazette early next year and come into force in 2024.
NFTs, DeFi are excluded
Crypto advocates welcome the development, but say the legislation has yet to address several key issues, including the future of NFTs and decentralized finance (DeFi).
” This represents the conclusion of the necessary discussions among EU common lawmakers, which have lasted for more than two years,” the European Cryptocurrency Initiative (EUCI) said in a statement .
The group said the legislation was highly focused on stablecoins because it was originally intended to respond to Facebook’s stablecoin project Diem, formerly known as Libra, and because lawmakers took a “very defensive” approach.
The EUCI also stated that since NFTs are now excluded from the scope of the MiCA, uncertainty will arise if regulators in EU member states use different definitions to interpret NFTs . In addition, DeFi projects are also exempt from regulatory legislation, but the EUCI said these were not properly defined in the final text.
Despite the above criticism, EUCI co-founder Marina Markezic said she is optimistic about the impact of MiCA on the entire crypto industry:
It creates a new set of regulations for cryptocurrency projects that will change the current weak position of cryptocurrencies and become established players in the financial services space. At the same time, we also believe that the industry should innovate without excessive burden.
On the occasion, EU Commissioner for Financial Services Mairead McGuinness said that cryptocurrency regulation will be at the top of the agenda for discussions with U.S. officials at the annual meetings of the International Monetary Fund and World Bank next week . Writing earlier this year on The Hill, an American political website, she called for a global approach to cryptocurrencies.