In a milestone development for global crypto regulation, finance ministers of the European Union (EU) have granted approval to the Markets in Crypto Assets (MiCA) regulation, which will give the bloc its first ever crypto licensing regime.
Final approval was given to the legal framework by the EU’s Council, which also reached agreement on a new law for the sharing of data on crypto tax holdings.
It was largely expected that the laws would be signed off, after ambassadors had already given their own thumbs-up to both the MiCA and tax measures the previous week.
What will MiCA actually mean for crypto in Europe?
The MiCA regulation stipulates that crypto firms – such as exchanges and wallet providers – will not be able to operate across the EU unless they hold a licence. It also requires stablecoin issuers to hold suitable reserves.
This new crypto authorisation law has been a long time coming; there has been political agreement on the main features of the regulation since June last year, at which point, EU policymakers had already spent nearly two years haggling over the framework.
Since then, administrative hold-ups have prevented the legislation from reaching its present stage sooner. However, the European Parliament gave its own go-ahead to the new rules in April, and after the latest meeting between EU finance ministers in Brussels, it is now expected that the provisions will be published in the bloc’s official journal in June or July.
The law is reportedly set to take effect in 2024.
“It’s important that we don’t regulate on our own”
One effect that the impending introduction of the comprehensive rules is likely to have, is putting pressure on other parts of the world – such as the UK and the United States – to further develop their own approaches to the regulation of cryptoassets.
With the crypto space naturally being a highly cross-border one, many eyes will now turn to such jurisdictions, which could help provide regulatory certainty of benefit to crypto firms.
The UK has set out a phased approach to crypto regulation, beginning with stablecoins and broadening out to cover unbacked cryptoassets at a later stage, although it has not provided a firm timeframe.
In the US, the focus so far has been on using existing securities rules as a basis for enforcement action in the sector, while decisions are still being made on whether to put in place bespoke new rules, and who would be responsible for applying them.
Still, it will be intriguing to see whether there is now greater urgency on the part of these countries to implement more meaningfully crypto-specific regulation, in the wake of the EU’s breakthrough.
In the words of the European Commission’s Mairead McGuinness, commenting on the latest development to CoinDesk: “I think everybody’s now aware that you can’t have an unregulated sector.
“We’re glad that we’re leading on this. We do think there needs to be international cooperation because it’s important that we don’t regulate on our own.”
Later the same day, ministers also clinched a deal on new measures to require crypto providers to provide information about their customers’ holdings to tax authorities. Such details could then be shared within the bloc to help prevent funds from being stashed in secret overseas wallets.
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