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European Parliment adopts MiCA Regulation

Updated: Jul 13, 2022

The long-awaited Markets in Crypto Assets (MiCA) bill has finally come to a successful conclusion following negotiations within the EU's Economic and Monetary Affairs Committee. MiCA's goal in the crypto-asset markets is to ensure a high level of consumer and investor protection as well as market integrity. It also seeks to address financial stability and monetary policy concerns that may arise from the widespread use of crypto-assets in financial markets. MiCA includes anti-market manipulation measures as well as measures to prevent money laundering, terrorist financing, and other criminal activities. The new legislative framework addresses the transparency, disclosure, authorization, and oversight of service provider transactions, with the goal of establishing a consistent approach across all 27 member states of the EU. MiCA aims to improve financial stability and investor safety in Europe by, among other things, requiring all bitcoin wallets to complete KYC (Know Your Customer) processes. If it is determined that crypto platforms do not adequately protect investors or endanger market integrity or financial stability, the European Securities and Markets Authority (ESMA) will be given the authority to prohibit or limit their use.

One of the rules that have been talked about is that transfers of more than 1,000 euros between cryptocurrency exchanges and unhosted wallets owned by individuals will be required to be reported. As the Ukraine-Russia crisis intensifies, the new framework aims to reduce anonymity in order to combat money laundering and sanctions evasion. For cryptocurrency enthusiasts, this is a contentious issue because they frequently trade digital currencies in order to maintain their privacy. The European Parliament has approved a new version of its crypto-regulation bill that does not include explicit language that would have prohibited Proof-of-Work (PoW) based digital currencies due to energy consumption concerns. As the most well-known application of the PoW consensus mechanism, this could indicate a tacit adoption of Bitcoin. The European Parliament voted to create the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) to oversee electronic money tokens. In addition, the bill establishes the European Monetary Authority (EMEA) to oversee the issuance of crypto-asset referenced tokens (ARTs), also known as "stablecoins."

These new regulations will actually bring more security to the crypto market. The fact that users will need to provide an official ID and register all activities will make theft or any other suspicious activity harder to happen, as investigators will have more clarity in all details. Collaboration between the blockchain and DeFi with the Government is a key role in the coexistence of both parties, as innovation is a set goal for everyone in Europe.

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