The much-anticipated Markets in Crypto Assets Regulation (MiCA) legislation was passed on Monday. It will focus on a coordinated approach of all EU members towards crypto. The bill initially had an indirect provision to ban proof-of-work mining due to its high power consumption. It was widely called a “proposed Bitcoin mining ban in the EU” by many crypto watchdog critics.
The legislation noted that one of its priorities is —
Ensuring that the EU financial services regulatory framework is innovation-friendly and does not pose obstacles to the application of new technologies.
The legislation also acknowledged stablecoins and said, ”While the crypto-asset market remains modest in size and does not currently pose a threat to financial stability, this may change with the advent of ‘global stable coins, which seek wider adoption by incorporating features aimed at stabilizing their value and by exploiting the network effects stemming from the firms promoting these assets.”
It also laid down EU’s four general and related objectives for passing MiCA –
- For crypto-asset markets to develop within the EU, there is a need for a sound legal framework, clearly defining the regulatory treatment of all crypto-assets that are not covered by existing financial services legislation.
- To support innovation by promoting the development of crypto-assets and the wider use of DLT, it is necessary to put in place a safe and proportionate framework to support innovation and fair competition
- To in still appropriate levels of consumer and investor protection and market integrity given that crypto-assets not covered by existing financial services legislation present many of the same risks as more familiar financial instruments.
- To ensure financial stability.
President of the European Commission, Ursula von der Leyen called for an identical approach with the Member States on cryptocurrencies to guarantee all the opportunities and risks are assessed. In December 2019, the European Commission and the Council cooperatively declared that they are committed to developing a framework that would ‘harness the potential opportunities that some crypto-assets may offer.”
The legislation concluded that the European Parliament was further working on a report on digital finance given its focus on crypto assets.