- EU is the first major jurisdiction in the world to adopt a comprehensive crypto framework
- EP discussed a plan to require stablecoin issuers to maintain adequate reserves
European Union legislators passed the crypto licensing regime Markets in Crypto Assets (MiCA) into law with an overwhelming majority on April 20, 2023. This makes the EU the first major jurisdiction in the world to adopt a comprehensive legal framework on crypto, Bloomberg reported.
Transfer of Funds regulation also adopted
The European Parliament also voted in a different law called the Transfer of Funds regulation. It is aimed at preventing money laundering by requiring crypto operators to identify their customers.
On April 19, legislators debated the idea of requiring crypto exchanges and wallet providers to ask for a license to operate in the EU, with overall support for the plan. They also discussed a plan to require stablecoin issuers to maintain adequate reserves, given that the stablecoins are pegged to another asset.
A “world-first” for crypto
Representatives of the European Commission (EC) have described the law as a “world first” in crypto legislation. Its idea is to protect consumers, market integrity, and financial stability. The law comes into effect next year.
EU at the forefront of digital economy
Stefan Berger, the legislator who conducted talks on the law, said it put the EU “at the forefront of the token economy” in a statement released by the European Parliament. Berger commented:
The European crypto-asset industry has regulatory clarity that does not exist in countries like the US. The sector that was damaged by the FTX collapse can regain trust.
Providing clear information
The regulation would require crypto companies to provide investors with fair, clear information and register with the authorities, as Bankless Times wrote a while back.
The EC first proposed the MiCA regulation in 2020. To become legally effective, the law requires the approval of the European Parliament and the European Council, which represents all EU member states.
The main clauses of the law take effect just over a year after publication in the EU’s official journal, possibly in June this year.
