European Union Is Set To Adopt The Mica RegulationJuly 4, 2022
The EU members have agreed to adopt the Markets in Crypto Assets (MiCA) regulation on June 30. The MiCA will be the first regulatory policy for the digital asset industry. The European Commission, EU member states, and lawmakers eventually agreed upon the deal following long hours of deliberation.
The discussants concluded after taking final measures to eradicate money laundering in the crypto space. The adoption of the MiCA regulation couldn’t have come at a worse time. It is the period bitcoin has had the worst quarter performance in nearly ten years.
Highlights of the MiCA Regulation
The MiCA regulation contains strict policies for all participants in the crypto industry, like exchanges and stablecoin issuers. This new regulation makes it compulsory for Tether’s USDT and Circle’s USDC to have sufficient reserves to meet withdrawal requests no matter the volume of such withdrawals.
Also, stablecoins with large trading volumes would have a cap on their daily transactions. That cap is 200 million euros per day. Also, the new regulation gives the European Securities And Markets Authorities (ESMA) the power to ban or restrict crypto platforms. However, there would be a reason for the ban, such as inadequate investor protection, financial instability, or a lack of market integrity.
One of the legal counsels representing the interest of the European parliament said, “today, we establish clarity for these harmonized markets and legal certainty for digital asset issuers. Under this regulation, crypto-asset service providers have equal rights. Also, there are high standards for all crypto market participants.”
Regarding environmental issues, MiCA makes it compulsory for firms to reveal their energy consumption data. Also, they must provide detailed reports of how the digital assets they mine affect the environment. An earlier version of the MiCA regulation proposed a ban on crypto mining.
However, the lawmakers voted the proposal down four months ago. The regulation doesn’t apply to bitcoin and other tokens that do not have issuers. However, all exchanges and trading platforms must display a warning notice indicating risks of losses linked with trading cryptos.
It is similar to what is obtainable in the forex market. The MiCA regulation doesn’t cover NFTs. However, EU members tasked the EU commission to determine whether there should be a separate regulation for NFTs. The EU Commission has 18 months to submit its findings.
Detailed Crypto Regulation Is Finally Available
The MiCA is the first effort to provide a detailed regulatory framework for cryptos. Many industry players view the move as a step in the right direction. Also, they believe that Europe could provide a pathway for crypto regulation worldwide.
The EU is proposing making the regulation effective within the next two years. The need to have a broad crypto regulation heightened following the terra network’s collapse in May.