The European Union (EU) has agreed on the full text of its Markets in Crypto Assets Regulation (MiCA). This framework outlines how the region is going to monitor the cryptocurrency sector. The EU has reportedly also agreed to further laws targeted at identifying those making crypto payments.
According to a statement released by the Council Of European Union on Wednesday, officials from the bloc’s member countries signed off the text of the proposed framework without further deliberations.
MiCA was the subject of political outlines set out in June to develop a comprehensive crypto legislative text for the EU jurisdiction. It is worth noting that the EU’s crypto regulatory framework is expected to be applied with a “legitimate interest of protecting holders of crypto assets” and fighting crypto-related crimes such as “pump and dump” schemes, “rug pulls,” money laundering, and terrorism funding.
Specific Provisions Of The Proposed MiCA Laws
Once passed into law, MiCA will introduce the first-ever licensing regime for crypto exchanges and digital wallets to be applied across the EU and impose strict rules on stablecoins that are intended to avoid problems like those witnessed after the collapse of Terra’s algorithmic stablecoin, UST, in May. As indicated earlier, the provisions also want crypto firms to put in place measures to help combat crimes such as money laundering and terror funding.
Concerning this, the draft laws include a specific clause that requires crypto wallet providers to carry out comprehensive know-your-customer (KYC) processes to reveal the identity of consumers making payments using cryptocurrencies such as Bitcoin (BTC). The draft reads:
“Offerers or persons seeking admission to trading algorithmic crypto assets that do not aim at stabilizing the value of the crypto assets by referencing one or several assets should, in any event, comply with Title II of this Regulation.”
The draft laws were passed without further discussions because there were concerns that MiCA regulations may limit the use of U.S. dollar-pegged stablecoins within the European Union. Since June, officials and lawmakers have attempted to turn the two political outlines agreed upon in June into a definitive legislative text.
As such, industry lobbyists were hopeful, they could still clarify measures in MiCA. Still, a softer legal language in the proposed laws leaked two weeks ago appears to have been turned down by countries such as France that are keen not to attack the sovereignty of the Euro.
Noteworthy, the recently leaked draft laws revealed that the diplomatic representatives of the EU countries had proposed companies or organizations behind cryptocurrencies to publish white papers showing all the details of technical roadmaps when seeking registration from relevant authorities.
Generally, the agreed-upon text urges countries within the bloc to “adopt a substance over form approach under which the features of the asset in question should determine the qualification, not its designation by the users.”
After this, the text is set to be presented before the European Parliament to be passed into law before being published in the EU’s official gazette. The rules are likely to take effect in 2024.
