Global Courant 2023-04-20 19:57:56
Markets in Crypto-Assets (MiCA) is the first attempt to create comprehensive regulation for digital assets in the EU.
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Lawmakers in the European Parliament have approved the world’s first comprehensive set of rules aimed at regulating the cryptocurrency industry.
In a vote on Thursday, the EU parliament voted 517 to 38 to pass the Markets in Crypto Act, or MiCA. The legislation, which aims to reduce risks for consumers buying crypto-assets, means providers could be held liable if they lose investors’ crypto-assets.
The rules will impose a number of requirements on crypto platforms, token issuers and traders in terms of transparency, disclosure, authorization and oversight of transactions, the EU Parliament said in a statement. rack Thursday.
Platforms will have to inform consumers about the risks associated with their activities, while the sale of new tokens will also be subject to regulation.
Stablecoins such as Tether and Circle’s USDC will need to maintain sufficient reserves to meet redemption requests in the event of massive withdrawals. Stablecoins that grow too large will also be capped at 200 million euros ($220 million) in transactions per day.
The European Securities and Markets Authority, or ESMA, will be empowered to intervene and ban or restrict crypto-platforms if they are found not to adequately protect investors or threaten market integrity or financial stability.
MiCA also addresses environmental issues surrounding crypto, with companies being forced to disclose their energy usage, as well as the impact of digital assets on the environment.
Mairead McGuinness, European Commissioner for Financial Services, praised the passage of the law on Thursday and said she expects the rules to apply “starting next year”.
Andrew Whitworth, EMEA policy director for blockchain company Ripple, said the parliamentary blessing was “an important milestone for the crypto industry around the world”.
“Consistency in implementation across the EU will be critical to providing crypto companies with the operational clarity to fuel innovation across Europe and guard against unintentional fragmentation of the single market,” Whitworth told via email. CNBC.
“As part of this, it should be ensured that legislation is applied proportionately with respect to how different companies’ crypto offerings are treated, based on the risk profiles of their operations.”
One step ahead of the US
Parliament also passed a separate law that aims to reduce the anonymity associated with the transfer of cryptocurrencies such as bitcoin and stablecoins, voting 529 to 29 to pass the fund transfer regulation.
This applies the so-called “travel rule”, which requires financial companies to screen, record and communicate information about both the sender and the recipient, to encrypt transactions to help fight money laundering.
Transfers between exchanges and self-hosted wallets owned by individuals must be reported if the amount exceeds the $1,000 threshold, a contentious issue for crypto enthusiasts who often trade digital currencies for privacy reasons.
In a tweet, Changpeng Zhao, CEO of the world’s largest crypto exchange Binance, said his company was “ready to make adjustments to our business in the next 12-18 months to be in a position of full compliance.”
Binance is heavily scrutinized by regulators on how it operates. In March, the Commodity Futures and Trading Commission sued Binance, Zhao and Binance’s former chief compliance officer, Samuel Lim, for actively recruiting U.S. users without permission.
Zhao praised MiCA as a “pragmatic solution to the challenges we collectively face”.
Regulators have tried to rein in the crypto market in the wake of numerous catastrophic industry failures. In May, terraUSD, a controversial stablecoin project, exploded in a $60 billion blowout after investors lost confidence in its technical underpinnings.
The demise of terraUSD set off a chain reaction in the industry, with several other companies, including Three Arrows Capital, BlockFi, and Voyager Digital also going out of business. Formerly the fourth-largest crypto exchange, FTX filed for bankruptcy in November in the crypto industry’s most high-profile failure to date.
The move puts the EU one step ahead of the US and UK, which have yet to introduce formal rules for the crypto space. A UK official said on Monday that specific crypto regulations could come into effect in about a year.
Once EU laws come into effect, crypto companies will be able to use their licenses in one European country to “passport” their services in different member states. Crypto companies have made efforts to obtain licenses from various European authorities and open new offices in anticipation of the law coming into effect.
Crypto exchanges Coinbase and Kraken recently received virtual asset service provider licenses in Dublin. Blockchain company Ripple is seeking a license from the Central Bank of Ireland.
US crypto companies are looking to expand abroad in response to strict regulations in their home country. The Securities and Exchange Commission issued Coinbase with a Wells notice last month, which is often one of the final steps before the regulator formally charges fees.
On Thursday, Coinbase CEO Brian Armstrong told CNBC at a fintech event that the company is prepared for a “year-long” legal battle with the SEC.
He said separately in a speech on stage that the US “has the potential to become a major market in crypto,” but offered no regulatory clarity at this point. If this continues, he said, Coinbase would consider options to invest more abroad, including moving from the US to elsewhere.
– CNBC’s Arjun Kharpal contributed to this report
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