EU Finally Approves New MiCA Law That Has Significant Impact On Crypto Industry

Key Points:

• European Union lawmakers approved MiCA, a new crypto licensing framework.
• With the vote, it became the world’s first large jurisdiction to enact complete crypto legislation.
• The decision comes after a discussion in which legislators overwhelmingly endorsed ideas to require crypto wallet providers and exchanges to get a license to operate throughout the region.

The ratification of the EU’s Markets in Cryptoassets, or MiCA, the law is the first time governments have attempted to control the fledgling sector on such a large scale, and it comes after the bankruptcy of many major firms, including the crypto exchange FTX.

With 18 absentees, European Union lawmakers voted 517-38 to support a new crypto licensing system, MiCA, on Thursday, making it the world’s first large jurisdiction to enact complete crypto legislation.

MiCA, under development for three years, has been hailed by crypto CEOs as a viable alternative to the US way of regulating the industry via enforcement proceedings.

However, detractors argue that the legislation is already out of date since it would do nothing to prevent some of crypto’s recent high-profile blowups, and there are already requests for changes.

MiCA regulations will go into force 12 to 18 months after the law is published in the EU’s Official Journal, which is expected in June.

With 14 abstentions, the European Parliament also voted 529-29 in support of a second rule known as the Transfer of Funds regulation, which compels crypto operators to identify their clients in order to prevent money laundering.

The vote comes after a Wednesday discussion in which legislators overwhelmingly endorsed ideas to force crypto wallet providers and exchanges to get a license to operate throughout the EU, as well as to compel stablecoin issuers to have appropriate reserves.

European Financial Services Commissioner Mairead McGuinness said on Wednesday that she expects the law to go into effect in July once it has been officially approved by the 27 member states.

Particular regulations will be implemented gradually, with laws controlling stablecoins, for example, slated to go into force in July 2024.

MiCA would compel any company providing crypto-related services in the region to register in one of the union’s member states before operating throughout the whole bloc.

The European Banking Authority and the European Securities and Markets Authority will be responsible for ensuring that crypto platforms follow the regulations, including sufficient risk management and governance mechanisms.

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