“MiCA: The EU’s Groundbreaking Regulation on Cryptocurrencies and Consumer Protection”

2023-04-20 11:46:44

MEPs approved rules for cryptocurrencies on Thursday, a first step at a time when several regulators around the world are trying to regulate this sector.

The MiCA (Markets in Crypto-assets) regulation, which aims to regulate this industry to fight against money laundering and the financing of terrorism and to protect consumers, was voted by a large majority. Until now, transfers of virtual assets, such as bitcoins, escaped European legislation on financial services.

“With the MiCA regulation, the European crypto-asset industry has regulatory clarity that countries like the United States do not have”, welcomed the rapporteur Stefan Berger (EPP), considering that this brings “an competitive advantage to the EU”. MiCA, together with the Remittances Regulation (TFR), also adopted “mark the end of the unregulated Wild West of crypto”, commented Ernest Urtasun (Greens), co-rapporteur of the Committee on Economic and Monetary Affairs on crypto-asset transfers. The lack of regulation has “resulted in massive losses for many early investors and served as a safe haven for hackers, fraudsters and international criminal networks for more than a decade”, he pointed out.

“Sufficient? No!”

Concretely, under the new European legislation, crypto-asset service providers (CASP) will have to register and provide precise data on their identity if they wish to operate in the EU. The “Travel Rule”, already existing in traditional finance, will apply in the future to transfers of crypto-assets.

It will require crypto-asset service providers to transmit certain information about customers and transactions to the financial institution receiving these transactions. In order to reduce the high carbon footprint of cryptocurrencies, larger service providers will additionally have to disclose their energy consumption.

These texts, which will have to be officially approved by the Council, aim to strengthen consumer protection and provide guarantees against market manipulation and financial crime. But voices have tempered their impact. “Crypto players will be able to start applying the basic rules of traditional finance,” said MEP Aurore Lalucq (Socialists and Democrats group, left) during the debates on Wednesday. “It’s good, it’s better than nothing, is it enough? No!”, She said.

The MEP notably regretted the planned application deadlines, explaining by way of example that the largest cryptocurrency exchange platform in the world, Binance, “will be able to comply with MiCA only in 18 months, 18 months during which savers will therefore have no protection”. In early April, Elizabeth McCaul, a member of the ECB’s supervisory board, also called, in a blog post, to push the efforts even further.

Illicit transactions made with crypto-assets in 2022 more than doubled year on year to nearly $21 billion, despite a shrinking market, according to data platform Chainalysis. The setbacks of recent months, including the bankruptcies of banks and platforms like FTX, have shaken the world of cryptocurrencies and reignited the debate on the regulation of the sector.

US regulators have launched an offensive against the practices of players in the sector. At the end of March, Binance was thus sued by the American regulator of financial derivatives.

MEPs approved rules for cryptocurrencies on Thursday, a first step at a time when several regulators around the world are trying to regulate this sector. The MiCA (Markets in Crypto-assets) regulation, which aims to regulate this industry to combat against money laundering and the financing of terrorism and protecting consumers, was passed at a…

1682000721
#European #Parliament #adopts #rules #regulate #cryptocurrencies

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.