After years of discussion, the time has finally come. The long-awaited, and infamous, bill to Markets in Crypto Assets (MiCA) has been approved by legislators in the European Union. This means that a broad regulatory system for the crypto industry in Europe is definitely on the way.
European crypto regulation is progressing steadily
The new version of MiCA will aim to introduce supervisory provisions, forms of consumer protection and safeguarding the environment and climate. An earlier draft of the bill sought to provide proof-of-work cryptocurrencies, such as bitcoin (BTC) and ethereum (ETH)but its implementation was eventually dropped from the bill.
MiCA, which has been hotly debated since its introduction in 2020, sets the rules for how crypto and digital assets should be treated by identifying where existing financial services legislation in the EU falls short. Efforts are made to achieve equal treatment of cryptocurrencies in all 27 Member States of the European Union.
“Transparency, disclosure, authorization and supervision of transactions by service providers are some of the measures addressed in the new bill, which pays extra attention to consumer protection.”
1/13 Agreement between the EU institutions on MiCA: we will have a common harmonized EU-wide regime for crypto-asset issuers and service providers, that will provide security for investors and support sustainability, while to reducing fragmentation and increasing legal clarity. pic.twitter.com/W08V2AFNef
— Ernest Urtasun (@ernesturtasun) June 30, 2022
stablecoin regulation
especially regarding stablecoins a lot has been added to MiCA in the recently passed bill. For example, stablecoins will have to adhere to strict rules to prevent a similar scenario as the demise of the Terra (LUNA) network from happening again.
“Large stablecoins will be subject to strict operational and prudential rules, with restrictions if they are widely used as a means of payment, and a maximum of 200 million euros in transactions/day”.
The reserves of stablecoins will have to be covered in a proper and secure manner. That basically means that algorithmic stablecoins, such as TerraUSD (UST), will no longer be allowed to exist in Europe under the new MiCA legislation.
