The European Union has taken some major steps towards the adoption of cryptocurrencies with their recent passing of two separate laws that govern the crypto industry, on Thursday. Parliament has endorsed the first EU rules to trace crypto-asset transfers, prevent money laundering...
The European Union has taken some major steps towards the adoption of cryptocurrencies with their recent passing of two separate laws that govern the crypto industry, on Thursday.
Parliament has endorsed the first EU rules to trace crypto-asset transfers, prevent money laundering, as well as common rules on supervision and customer protection.
Press release: https://t.co/t105fHevXz pic.twitter.com/UycXJwDJRF— European Parliament (@Europarl_EN) April 20, 2023
The first, MiCA (Markets in Crypto-Assets Regulation) is a licensing regime that requires crypto operators to hold a license to operate within the EU bloc, while also requiring them to identify customers in a bid to limit money laundering activities.
MiCA will focus on transparency, disclosure, authorization, and supervision of transactions. Customers will be better informed about the risks, costs, and charges associated with their transactions.
The second, Transfer of Funds Regulation requires both sides of a transaction to store information about the source and beneficiary of the asset.
Transactions exceeding €1,000 from self-hosted wallets interacting with hosted wallets managed by crypto-asset service providers will also be regulated. However, the rules will not apply to person-to-person transfers conducted without a provider or among providers acting on their own behalf.
These new laws come as lawmakers in Europe voted 517-38 in favor of MiCA and 529-29 in favor of the Transfer of Funds Regulation respectively, with 18 abstentions and 14 abstentions accordingly. This makes it the first major jurisdiction worldwide with such detailed rules governing the cryptocurrency industry.
The European Securities and Markets Authority (ESMA) will establish a public register for non-compliant crypto-asset service providers operating in the EU without authorization. To address the high carbon footprint of cryptocurrencies, significant service providers will be required to disclose their energy consumption.
According to a statement released by Stefan Berger – the lawmaker who led negotiations on these laws – that puts Europe at “the forefront of the token economy”, offering regulatory clarity unlike many other countries such as United States and providing more trust for investors damaged by past incidents like FTX collapse.
Ernest Urtasun, co-rapporteur for the Economic and Monetary Affairs Committee on crypto-asset transfers, emphasized that the new rules will help detect and stop criminal crypto flows while complying with international standards.
The Markets in Crypto Assets regulation, initially proposed by the European Commission in 2020, needed approval from both the Parliament and the EU’s Council, representing the bloc’s member states, to become law.
The legislation now awaits formal endorsement by the Council, followed by publication in the EU Official Journal, and will enter into force 20 days later. This development fulfills citizens’ expectations for blockchain technology standards and safeguards, as expressed in Proposal 35(8) of the conclusions of the Conference on the Future of Europe.