European Parliament Approves MiCA Regulation, Toward Harmonization of EU-Wide Regulations on Cryptocurrencies

Unification of Cryptocurrency Regulations in Europe

The European Parliament passed the Crypto Asset Market (MiCA) Bill on the 20th. This will unify the legislation on crypto assets (virtual currencies) throughout the EU.

The MiCA Regulation stands for “Market in Crypto Assets” and aims to unify the regulation of virtual assets that are not regulated by current EU law and protect users and investors. It focuses on regulating stablecoins and other digital asset transactions, including licensing and consumer protection requirements.

The regulation will allow virtual asset service providers and issuers to operate across the EU with a single license. As a regulatory division, it falls under the jurisdiction of the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA).

Affiliates must comply with transparency and disclosure requirements regarding the issuance and trading of virtual assets, including the preparation of detailed white papers for each asset offering, as well as the Travel Rule.

Stablecoin issuers must follow strict rules, including holding enough cash to back up customer funds. Transparency and disclosure requirements require disclosure of characteristics, risks, price stabilization mechanisms, and asset custody methods in white papers and websites. It also ensures the liquidity and reliability of assets, conducts regular audits and stress tests, and guarantees priority and redemption rights for token holders.

The MiCA regulation will not come into force immediately, but will be enacted after it has been formally approved as EU law by the European Council. The EU securities regulator, ESMA, will then develop detailed guidance on how to apply the MiCA. Stablecoins are expected to come into force in July 2024, with other requirements, including the Travel Rule, expected to come into force from January 2025.

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Clarification of regulations

The bill passed with 517 votes in favor, 38 against and 18 abstentions. Industry players appreciate the clarity of the regulations and expect other regions to follow suit.

Coinbase’s Vice President of International Policy Tom Duff Gordon appreciated the adoption of MiCA, stressing that the EU recognizes the potential and social promise of emerging technologies.

Richard Teng, head of Europe and Middle East at Binance, said the regulatory landscape has moved forward, making the EU an attractive place for innovation and talent acquisition for Web3 companies. He also indicated that the company will adjust its business to be fully compliant with MiCA over the next 12 to 18 months.

In addition, since MiCA regulations do not support virtual currency lending, decentralized finance, and NFTs, there are calls for consideration of “MiCA 2”.

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