In May 2022, the European Parliament and Council, the legislative arms of the European Union, came to a provisional agreement on regulations on crypto, namely, the Regulation of Markets in Crypto-Assets, or MiCA.
Key highlights
- MiCA proposes to regulate crypto asset services and crypto asset issuers.
- By regulating these entities, Europe intends to provide consumer protection, transparency, and governance standards, regardless of the decentralised nature of the technology.
- For instance, under MiCA, crypto asset service providers will be liable in case they lose investors’ assets, and will be subject to European market-abuse regulations, including those on market manipulation and insider trading.
- Then, MiCA goes further to put forth specific regulations for stable coins, rightly demarcating them from other crypto assets.
- Under the proposed rules, issuers of stable coins — asset-referenced tokens is the term it uses — are subject to a greater degree of compliance and declaration.
- Under MiCA, stablecoin issuers must maintain reserves to cover all claims of the coins, and should implement a process for immediate redemption if and when holders seek one.
