On Thursday, European Union lawmakers approved the Markets in Crypto-Assets (MiCA) licensing regime with a vote of 517-38, along with a separate law known as the Transfer of Funds regulation, which mandates crypto operators to identify their customers to prevent money laundering. The European Parliament voted 529-29 in favor of the latter law, with 14 abstentions.
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
This makes the EU the first major jurisdiction to introduce a comprehensive crypto law. The new regulations require crypto wallet providers and exchanges to obtain a license to operate in the EU and stablecoin issuers to maintain sufficient reserves. The European Securities and Markets Authority welcomed the vote and will announce its timetable for drafting secondary legislation under MiCA.
However, the agency still warns consumers that investing in cryptoassets is risky with limited safeguards. The MiCA regulation was proposed by the European Commission in 2020 and will take effect just over 12 months after publication in the EU’s official journal, likely in June.
Reason for introducing the MiCA Bill
The purpose of the bill is to establish a uniform regulatory structure for crypto assets among EU member states. Although legal and linguistic checks and publication of the bill in the EU journal are still required, the policy may be implemented as early as 2024, pending approval by the European Council. The approval of the bill was met with widespread praise from crypto industry leaders and policymakers.
Leading Voices in Crypto Respond to EU Parliament Vote
Changpeng “CZ” Zhao, CEO of Binance, suggested he would begin implementing changes to the exchange in the next 12-to-18 months in order to be in compliance with the potential new framework. Others targeted the United States for seemingly falling behind in digital asset regulation — a move that could drive companies to the EU with the implementation of MiCA.
“Overall we think this is a pragmatic solution to the challenges we collectively face,” said CZ. “There are now clear rules of the game for crypto exchanges to operate in the EU.”
The European Parliament voted for MiCA to be implemented.
This means one of the world’s largest markets is introducing tailored regulations for crypto to protect users and support innovation.
The fine details will matter, but overall we think this is a pragmatic solution to…
— CZ 🔶 Binance (@cz_binance) April 20, 2023
CEO of Gemini, Tyler Winklevoss expressed dismay at the slow speed upon which the US is providing frameworks for existing crypto businesses.
While US regulators have been busy infighting and refusing to provide the most basic of clarity for the crypto industry, the European Union just approved the MiCA regulation, which provides a comprehensive regulatory framework for crypto in Europe. It's sad to see the US being…
— Tyler Winklevoss (@tyler) April 20, 2023
✅ I welcome the European Parliament’s vote today to approve comprehensive EU rules on crypto: a world first.
The rules will start applying from next year. We’re protecting consumers and safeguarding financial stability and market integrity. pic.twitter.com/cdn58rb9FA
— Mairead McGuinness (@McGuinnessEU) April 20, 2023
What happens next with MiCA
The texts will now have to be formally endorsed by European Parliament Council. They will enter into force 20 days later.
In adopting this legislation, Parliament is responding to citizens’ expectations to set safeguards and standards for the use of blockchain technology as expressed in Proposal 35(8) of the conclusions of the Conference on the Future of Europe.