The EU Begins Crypto RegulationJuly 16, 2022
The European Union entered an agreement on the 30th of June over crypto regulation. It gave the go-ahead to its primary legislative proposal, the Markets in Crypto-Assets. It is meant to oversee the sector in 27 EU member states.
The Twin Legislations
Lawmakers from member states of the EU Parliament passed the Transfer of Funds Regulation a day earlier. The regulation places compliance standards for crypto assets. They would crack down on any money laundering move in the sector.
The two legislations can serve as a yardstick for other members of the Financial Action Task Force outside the EU 27. It’s good to not only focus on results but events that led to the results.
The Financial Action Task Force (FATF) is an intergovernmental body with membership across most countries. The body is not a democratically elected one but is made up of country representatives. The representatives develop plans on how they think countries should execute anti-money laundering policies.
The recommendations from the FATF are not binding on any member state. But if a member refuses implementation, it might result in financial and diplomatic backlashes.
The FATF first released its recommendations on crypto assets along these lines in 2015. It was the same year countries such as Brazil were debating crypto regulatory bills. The 2015 recommendation which took a cue from the US FCEN was reconsidered in 2019.
A new document was released which contains the present FATF recommendation on crypto assets. It is titled “The Updated Guide for a Risk-based Approach to Virtual Assets.”
This is why the US, the EU, and FATF countries are planning to regulate crypto assets. It is in addition to the mentioned reasons like consumer protection.
The EU’s Digital Finance Package
The Markets in Crypto-Assets is part of the legislative recommendations planned within the digital finance package framework. It was launched by the EU in 2020. The main goal of the digital financial package was to facilitate competitiveness and innovation in the financial sector.
The goal also includes setting Europe as the standard for consumer protection. The Markets in Crypto-Assets and the DLT Pilot Regime were the first to be undertaken. They were adopted by the European Commission in September 2020 along with the ToFR.
The Main Points of MiCA
MiCA is the major proposal for crypto regulation in Europe, not the only one though. Member countries also have domestic regulations. It is just the first framework to have an almost global scope.
Negotiators from the EU Commission, Parliament, and Council reached an agreement on market supervision. This was reached under the French Presidency on the 30th of June during the political trialogue.