Policymakers with the European Parliament Committee on Economic and Monetary Affairs (ECON) have approved crypto regulation for the Markets in Crypto-Assets (MiCA) framework. This happened after trialogue negotiations between the EU Council, the European Commission, and the European Parliament.
The MiCA framework was first introduced to the European Commission in September 2022 to develop a stable regulatory framework for cryptocurrencies among the 27 EU member states. The framework stipulates how the region would monitor the crypto sector.
It is reported that the parliamentary committee members passed the crypto framework policy following a vote by the European Council, resulting in the majority of the house voting in favor. Twenty-eight members voted for it, while only one was against the proposal. The final vote is expected from the entire European Parliament session soon.
Through a Monday, October 10 tweet, ECON member Stefan Berger acknowledged that the committee had accepted the MiCA legislation. The post read:
“Another step further… The ECON Committee adopted the outcome of the trialogue negotiations on #MiCA. Good news.”
Now that Parliament has approved the latest version of the text, the MiCA policies may be implemented starting in 2024. This is verifiable as the document has already passed legal and linguistic checks and is due for publication in the official European Union journal. An excerpt from the MiCA text dated October 5 reads:
“It is important to ensure that the [European] Union’s financial services legislation is fit for the digital age and contributes to a future-ready economy that works for the people, including by enabling innovative technologies.”
Beyond the MiCA vote, the EU council also passed a provisional deal on the Transfer of Funds Regulation. The legislation, which passed by a landslide, is targeted at establishing compliance standards for cryptocurrency assets as a means to cracking down on money laundering.
“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.”
If the two regulatory frameworks are officially approved, it will affect all members of the European Union but potentially serve as a precedent for global lawmakers within the crypto space.
Provisions of the proposed MiCA laws
Stretching from an October 6 report on the provisions of the proposed MiCA laws, the framework is expected to bring forth the first-ever licensing regime for crypto exchanges and digital wallets applicable across the EU. Among the areas of interest include strict rules on stablecoins as a precaution against cases similar to the collapse of Terra’s algorithmic stablecoin, UST.
Other areas of interest include the fight against crime, wherein a specific clause on the need for thorough know-your-customer (KYC) processes features. It 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.”
With concerns that MiCA regulations would affect the use of U.S. dollar-pegged stablecoins within the EU, the draft laws were pushed forward without much consultation. For the fourth month now, officials and lawmakers have been trying to change the political frameworks passed in June to come up with a clear legislative text.
Crypto Regulations Need Collaboration and Collaboration – IMF
The IMF recently issued a report detailing that one of the main issues in the crypto space is that there is no “harmonized” understanding of what constitutes a “crypto asset.”
The international financial institution has called for a global crypto regulatory framework that is “comprehensive, consistent, and coordinated.” In the same way, IMF Managing Director Kristalina Georgieva, during her speech earlier in the year at the Atlantic Council in Washington D.C., opined on the future of money, crypto, and CBDCs. In her opinion, central banks have transcended from conceptual discussions on digital currencies to the practical phase, noting:
“The IMF is deeply involved in this issue, providing technical assistance to many members. An important role for the Fund is to promote the exchange of experience and support the interoperability of CBDCs.”
She also reiterated that the history of money is entering a new chapter, with many countries looking to preserve essential aspects of their traditional monetary and financial systems while experimenting with new digital forms of money.