April 24, 2023

Everything You Need To Know About MiCA EU Regulations

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The European Union has recently approved new regulations for crypto-assets. The Markets in Crypto-Assets (MiCA) regulation aims to provide common rules for the supervision, consumer protection, and environmental safeguards of crypto-assets, covering those that are not regulated by existing financial services legislation.

Supervision of Transactions

The regulation includes provisions for transparency, disclosure, authorization, and supervision of transactions, with the goal of informing consumers about the risks, costs, and charges linked to their operations. It also aims to support market integrity and financial stability by regulating public offers of crypto-assets and implementing measures against market manipulation, money laundering, terrorist financing, and other criminal activities.

Carbon Footprint Reduction

One of the significant aspects of the new regulations is the requirement for significant service providers to disclose their energy consumption to reduce the high carbon footprint of cryptocurrencies. This will encourage companies to seek more sustainable solutions and reduce their environmental impact.

Public Register for Non-Compliant Crypto-Asset Service Providers

In addition, the European Securities and Markets Authority (ESMA) will set up a public register for non-compliant crypto-assets service providers that operate in the European Union without authorization. This will help prevent money laundering and other criminal activities, making it more difficult for criminals, terrorists, and sanctions evaders to misuse crypto-assets.

Approval and Implementation of MiCA Regulation

The MiCA regulation has been approved by the European Parliament, with 517 votes in favor to 38 against and 18 abstentions. It will have to be formally endorsed by the Council before publication in the EU Official Journal and will enter into force 20 days later.

Unifying the Currently Fragmented European Market

The regulation is a significant step forward in providing regulatory clarity for the European crypto-asset industry, giving consumers protection against deception and fraud while allowing the industry to regain trust after recent collapses. Stefan Berger, lead MEP for the MiCA regulation, stated that "this puts the EU at the forefront of the token economy with 10,000 different crypto-assets. Consumers will have all the information they need, and all underlying risks around crypto-assets will have to be monitored."

Unifying the Currently Fragmented European Market

The new legal framework will also unify the currently fragmented European market that has 27 regulatory regimes, creating a competitive advantage for the EU. Co-rapporteur for the Civil Liberties, Justice, and Home Affairs Committee, Assita Kanko, stated that "any administrative burden on crypto companies and innovators will be more than offset by the fact that we are unifying the currently fragmented European market."

In Conclusion

The MiCA regulation is a significant step forward in providing regulatory clarity for the European crypto-asset industry, allowing it to compete on a global level. The regulation demonstrates the European Union's commitment to embracing new technologies while ensuring they are safe, secure, and sustainable.