Key points to remember
- The European Council has approved Markets in Crypto-Asset (MiCA), the comprehensive regulatory framework for the use of crypto in the EU.
- MiCA’s primary focus is consumer protection, requiring crypto-asset service providers to register in countries of operation and guarantee stablecoin reserves.
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THE The Council of the European Union – the financial arm of the EU – on May 16 approved the Crypto-Asset Markets Regulation (MiCA), landmark legislation that will establish a comprehensive regulatory framework for cryptocurrencies across Europe. within EU borders.
The Council has just adopted the first ever EU rules on crypto-asset and services markets.
The new regulation aims to improve transparency, preserve financial stability and strengthen consumer protection while promoting innovation. #DigitalFinanceEU #Mica
— EU Council (@EUCouncil) May 16, 2023
The MiCA frameworks were first proposed by the European Commission in 2020, with legislation formally adopted by the European Parliament in April 2023. After debates and negotiations between EU Member States and stakeholders from the crypto industry, the final text of the regulations has been agreed by all members of the European Council on 16 May 2023.
Scheduled to be implemented in 2024, the MiCA will establish a number of requirements for crypto service providers, such as licensing, customer due diligence, and risk management. The regulations will also create a framework for issuing and trading stablecoins, utility tokens, and other digital assets such as NFTs.
Under MiCA, customer protection is the main objective. Stablecoin issuers must have sufficient reserves to back up their pegged fiat coins in the event of a crash, while crypto-asset service providers must obtain a license from regulators in the EU countries where they operate. These will help provide appropriate security measures and risk protection for customers.
The MiCA framework has been welcomed by some crypto industry players, who see it as a necessary step to protect investors and promote innovation. Meanwhile, US SEC Commissioner Hester Peirce declared that “MiCA should serve as a model for us (the United States)”Financial Times Summit on Crypto and Digital Assets on May 11, 2023.
Alongside MiCA, the European Council will formally vote at the end of May to include tax regulations in its new regulatory framework for crypto. Called on Directive on Administrative Cooperation (DAC8), these additional regulations will attempt to combat tax evasion by EU residents and provide additional oversight, especially for those holding more than €1 million in high-yielding assets.