The Market in Cryptoassets (MiCA) received official approval from the Parliament of the European Union, establishing a regulatory framework to set industry standards. The approval, following the FTX collapse, aims to protect investors from such failures.
‘Stringent Rules are Very Much Needed’
The EU Parliament voted 517-38 in favor of MiCA, a new cryptocurrency licensing policy. It also supported a separate law requiring digital asset operators to identify their clients concerning any fund transfer to prevent money laundering. The “travel rule,” used in traditional finance, will cover cryptocurrency transactions providing customers with information about the assets’ source and beneficiary. It will not cover person-to-person transactions.
The European Commissioner for Financial Stability, Financial Services, and the Capital Markets Union, Mairead McGuinness, praised the MiCA legislation as the world’s “first comprehensive crypto rules.” She emphasized the need for such standards due to the multiple crashes and scandals that shuttered the industry last year.
“We are putting safeguards in place that would prevent companies active on the EU market from engaging in some of the practices that led certain cryptoasset operators to collapse. As we have seen in recent months, stringent rules and supervision are very much needed because we’ve had the collapse of projects such as FTX, Terra Luna, Celsius, and Voyager.”
The legislation on stablecoins is expected to come into effect from July 2024, while the broader rules on crypto providers should become live from January 2025.
CZ Praises the New Rules
Changpeng Zhao, CEO of Binance, praised the EU’s move, stating that it gives more protection to consumers and fosters innovation in the asset class.
The European Parliament voted for MiCA to be implemented.
This means one of the world’s largest markets is introducing tailored regulations for crypto to protect users and support innovation.
The fine details will matter, but overall we think this is a pragmatic solution to…
— CZ 🔶 Binance (@cz_binance) April 20, 2023
Coinbase CEO Brian Armstrong recently urged the American authorities to apply rules to the industry; otherwise, the nation might witness an outflow of companies and talent. He hinted that his exchange could relocate should the situation remain unchanged.