EU Approves Landmark Crypto Licensing Regime
MiCA Provides Guidelines for Exchanges, Wallets, Stablecoins and More
By: Samuel HaigCrypto News
European finance ministers unanimously approved a regional regulatory framework for digital assets on Tuesday.
The Markets in Crypto Assets (MiCA) regulations provide guidelines for cryptocurrency exchanges and wallet providers, in addition to utility tokens, asset-backed tokens, and stablecoins. It also sets out AML obligations for crypto firms.
“I am very pleased that today we are delivering on our promise to start regulating the crypto-assets sector,” said Sweden’s finance minister, Elisabeth Svantesson. “[MiCA] will better protect Europeans who have invested in these assets, and prevent the misuse of [the] crypto industry for the purposes of money laundering and financing of terrorism.”
While the council formally adopted MiCA on May 16, the legislation won’t begin to take effect until mid-2024.
On the same day, the 27 EU member states also agreed to cooperate on regulating crypto asset taxation. National tax authorities will automatically exchange reporting information provided by virtual asset service providers (VASPs) to ensure tax compliance.
The move comes as crypto firms continue to face difficulties in obtaining clear regulatory guidance in the United States. Further, industry stakeholders and public officials criticize the U.S. Securities and Exchange Commission (SEC) for pursuing an aggressive campaign of regulation by enforcement.
“MiCA should serve as a model for [the United States],” said Hester Peirce, an outspoken SEC commissioner affectionately nicknamed ‘Crypto Mom.’
Coinbase, the country’s top centralized exchange, sued the SEC last month for failing to respond to previous legal action demanding the agency adhere to its formal rulemaking process to deliver clear regulatory guidelines informed by public input. The SEC responded that no law requires it to respond to the action within a given time frame.
Markets in Crypto Assets
MiCA establishes licensing and due diligence regimes for VASPs, and frameworks for issuing utility tokens, stablecoins, and other digital assets.
Exchange operators must receive national licensing in the country in which they are headquartered. Stablecoin issuers are required to maintain sufficient reserves to redeem the outstanding supply of fiat-pegged tokens.
The European Commission first proposed MiCA back in September 2020 as part of a broader package intended to address gaps in existing EU regulations and promote new technology adoption. The package also includes new cybersecurity provisions and a pilot program for distributed ledger technology-based market infrastructure.
The council noted that only a handful of member states have adopted comprehensive web3 regulations at a national level.