The European Parliament has approved the Markets in Crypto-Assets Act (MiCA), a legislation that standardizes regulations and establishes harmonized rules for crypto assets across the European Union. The act, first introduced in 2020, awaits approval from the European Council before it can become effective regulation.
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- MiCA intends to provide legal certainty for the crypto industry and investors by setting guidelines for the operation, structure, and governance of digital asset token issuers. It also outlines rules on transparency and disclosure requirements for issuing and trading cryptocurrencies.
- Once implemented, MiCA will require companies offering crypto-related services in the EU to register in one of the member states, allowing them to operate across the bloc.
- Despite gaining preliminary approval last summer, MiCA does not include rules governing critical areas such as decentralized finance and non-fungible tokens, prompting calls for a MiCA 2 from figures like European Central Bank chief Christine Lagarde.
- MiCA mandates stablecoin issuers to maintain a sufficient local reserve to meet redemption requests in the event of mass withdrawals.
- Mairead McGuinness, the European commissioner for financial services, said she expects the rules to start applying “from next year.” The rules on stablecoin will take effect in July 2024, while other requirements will be enforced from January 2025.
- The EU also passed the Transfer of Funds rule, which obligates exchanges to share personal and transfer data on all crypto transactions with authorities upon request and report on self-hosted wallets that send over 1,000 euros (US$1,100).
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