European Parliament approves MiCA, world’s first comprehensive crypto law

The European Parliament has become the world’s first tier one jurisdiction to bring into law a comprehensive set of rules aimed at regulating cryptocurrencies. This is after EU lawmakers overwhelmingly voted in favour of the Markets in Crypto Act, or MiCA regulation.

And on Thursday, Changpeng Zhao, CEO of world’s largest cryptocurrency exchange Binance, said the move brings to market “clear rules of the game for crypto exchanges.” It’s a win for Europe.

EU parliament greenlights key crypto regulation

European Union lawmakers voted 517-38 to approve the MiCA legislation, a highly anticipated regulatory framework now set to take effect in 2024.

The crypto law was formally agreed upon in June 2022 and looks at rules around consumer protection, including providing for safeguards against market manipulation. The legislation also highlights environmental safeguards touching on crypto-assets.

Thursday also saw the EU lawmakers pass legislation on the tracing of crypto transfers. The Transfer of Funds law mandates all crypto operators within the bloc to adhere to strict KYC and AML rules as well as for all crypto wallets and exchanges to first get licensed before offering their services in the jurisdiction.

The law also requires stablecoins like tether to ensure they maintain sufficient reserves for their tokens at all times, with this meant to allow for seamless redemptions should there be need for mass withdrawals.

The European Securities and Markets Authority (ESMA) welcomed the EU lawmakers’ approval of MiCA, commenting that secondary legislation is needed before the law takes effect. ESMA is working with other agencies and stakeholders, including the European Central Bank to develop the necessary implementing measures.

Binance CEO hails MiCA as “tailored regulations”

In a press release, the European Parliament noted that MiCA covers all crypto assets not regulated under existing legislation, including token issuer and crypto trading services providers. The industry will have to adhere to rules covering transparency, disclosures, authorisation, and supervision of transactions to ensure customer protection.

Binance CEO Changpeng Zhao commented on the MiCA vote as a critical step for crypto in the EU, noting the “tailored regulations” will not only protect users but also help support innovation. He added in a tweeted statement:

“The fine details will matter, but overall we think this is a pragmatic solution to the challenges we collectively face. There are now clear rules of the game for crypto exchanges to operate in the EU. We’re ready to make adjustments to our business over the next 12-18 months to be in a position of full compliance.”

While the US Securities and Exchanges Commission (SEC) has maintained crypto exchanges have to “come in and register,” the industry has been quick to remind the regulator that it has not provided any “comprehensive guidelines” on the process. Messari founder Ryan Selkis pointed this out on Wednesday.

This week saw Brian Armstrong, the CEO of US-based crypto exchange Coinbase, lament the regulatory environment in the country. In a statement before SEC Chair Gary Gensler’s testimony at a Congressional hearing, Armstrong said he was prepared to look at shifting the exchange’s operations overseas if regulatory clarity continued to be a pipe dream in the US.

Congressman Tom Emmer recently slammed the SEC Chair as having been an “incompetent cop on the beat.”

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