The European Union has taken another step towards establishing a legal framework for digital assets after its landmark Markets in Crypto Assets (MiCA) legal framework received unanimous approval from the European Council on Tuesday. 

See related article: How Europe’s MiCA can pave the way for crypto’s revival

Fast facts

  • The MiCA rules, set to be one of the world’s first such comprehensive legislations for the Web3 industry, require cryptocurrency firms such as exchanges and wallet providers to seek a license to operate across the bloc. Additionally, stablecoin issuers must hold suitable reserves.
  • The legislation was approved unanimously by finance ministers from all 27 EU member states. The full agreement was widely expected since the European Parliament greenlighted the MiCA legislation on April 20. 
  • “Recent events have confirmed the urgent need for imposing rules which will better protect Europeans who have invested in these assets, and prevent the misuse of crypto industry for the purposes of money laundering and financing of terrorism,” said Elisabeth Svantesson, Sweden’s finance minister, in a statement.
  • The newly approved legislation does not encompass every aspect of digital assets, leaving out areas like non-fungible tokens and decentralized finance. These subjects are expected to be included in subsequent versions of the law.
  • The finance ministers also agreed to new tax transparency rules that mandate cryptocurrency service providers to share information about their clients’ holdings with tax authorities.
  • The Council’s approval of MiCA comes as crypto firms have called for clearer regulations in the world’s largest economy, the U.S.
  • Coinbase, the biggest cryptocurrency exchange in the U.S., recently called for the Securities and Exchange Commission to provide the industry with regulatory clarity. However, in a Monday filing to the 3rd U.S. Circuit Court of Appeals, the SEC said that no statute or regulation requires the SEC to act on Coinbase’s petition according to a specific timeline.

See related article: ECB’s Lagarde gets pranked, reveals digital euro will have ‘limited’ control

(Updates to add the fifth bullet.)