On Wednesday, the European Union (EU) formally signed its landmark crypto regulation into law. With the Markets in Crypto Assets (MiCA) turning into law, the bloc has inched closer to becoming the first major jurisdiction in the world with tailored rules for the sector.
According to sources, the MiCA was signed into law by the European Parliament president Roberta Metsola and Swedish Rural Affairs Minister Peter Kullgren. Notably, alongside MiCA, lawmakers signed a separate anti-money laundering law that mandates crypto providers to verify their clients’ identities when they transfer funds.
To share the news, the Swedish government took to its Twitter handle. Notably, the Swedish government was the one chairing legislative talks as it currently holds the EU presidency. According to a parliamentary spokesperson, the laws in question include MiCA and the transfer of funds (TFR) rules as well as two unrelated regulations on trade with Ukraine.
According to the EU’s plan, MiCA will come into force in a few weeks after being published in the EU’s official journal, which is likely in June. Its provisions include offering crypto exchanges and wallet providers a license to operate across the 27-nation bloc. It also mandates stablecoin issuers to hold appropriate reserves which is expected to come into effect between 12 and 18 months later.
MiCA was first proposed by the European Commission in 2020 and drew controversy when lawmakers came close to inserting environmentally-minded provisions that could have amounted to a ban on the proof-of-work technology used by Bitcoin.
In May, the EU Council members who are also twenty-seven Finance Ministers representing the EU’s member states granted their long-awaited approval for the MiCA legislation. The adoption of MiCA legislation by the European Council followed the formal approval by the European Parliament on April 20, with a huge margin of 517-38 and 18 abstentions following a series of delays.
While the provisions were broadly welcomed by the industry, attention has also turned to the next stage of EU crypto regulation, with future laws potentially covering topics such as staking, non-fungible tokens, and decentralized finance. Several lawmakers from nations across the bloc have deemed the framework to be insufficient in regulating the sector.
In addition, Christine Lagarde, president of the European Central Bank (ECB), called for the “MiCA II” bill which possibly would be an addition to MiCA. The ECB president said in June that the bill should control the activities of crypto-asset staking and lending, which are undoubtedly rising.
Countries across the globe have set their eyes on the EU as it makes its way through the crypto industry via its landmark MiCA legislation. In fact, Hester Pierce, commissioner of the United States Securities and Exchange Commission (SEC) and a Republican lawmaker, said that the MiCA regulation can serve as a model for crypto regulation to be developed in the US.
The anti-money laundering regulation has been one of the top priorities for regulators across the globe. In particular, the European Banking Authority (EBA) is seeking public input on proposed amendments to its anti-crypto money laundering guidelines. The amendments primarily focus on including crypto-asset service providers (CASPs).