The European Parliament have approved the world’s first comprehensive package of rules aimed at regulating the cryptocurrency industry.
- The EU Parliament voted 517 in favor and 38 against to pass the Markets in Crypto Act, or MiCA. The legislation seeks to reduce risks for consumers buying crypto assets.
Key features of Markets in Crypto Act, or MiCA
- The rules will impose a number of requirements on crypto platforms, token issuers and traders around transparency, disclosure, authorization, and supervision of transactions.
- Platforms will be required to inform consumers about the risks associated with their operations, while sales of new tokens will also come under regulation.
- Stablecoins like tether and Circle’s USDC will be required to maintain ample reserves to meet redemption requests in the event of mass withdrawals.
- The European Securities and Markets Authority, or ESMA, will be given powers to step in and ban or restrict crypto platforms if they are seen to not properly protect investors, or threaten market integrity or financial stability.
- MiCA also addresses environmental concerns surrounding crypto, with firms forced to disclose their energy consumption as well as the impact of digital assets on the environment.
- The “travel rule” will in future cover transfers of crypto assets. Information on the source of the asset and its beneficiary will have to “travel” with the transaction and be stored on both sides of the transfer.
- The law would also cover transactions above €1000 from so-called self-hosted wallets (a crypto-asset wallet address of a private user) when they interact with hosted wallets managed by crypto-assets service providers.
- The rules do not apply to person-to-person transfers conducted without a provider or among providers acting on their own behalf.
