EU Adopts MiCA Regulations: What Lies Ahead for Cryptocurrencies?
The European Union has adopted a new legislative framework for the crypto asset market (MiCA). Even though the development of this document began back in 2020, the issue of regulation has become increasingly urgent, especially following the problems that emerged in 2022.
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The essence of MiCA provisions
As part of the EU's digital finance package, MiCA aims to tackle fraudulent investment schemes and cybercrime, including money laundering through cryptocurrencies. Its goal is to create a safer environment for investors and users.
What are the new rules?
Crypto companies must now register with a financial regulator in at least one EU member state and demonstrate a reliable risk management system.
Stablecoin issuers must maintain sufficient reserves and follow restrictions on non-Euro pegged tokens, with a trading volume limit of €200 million per day.
However, the most concerning issue is crypto companies having to provide information about cryptocurrency transfers, including the sender and the recipient, to local anti-money laundering authorities.
Not all segments are covered
The economic influence of the EU could potentially make MiCA provisions a globally recognized standard, similar to the General Data Protection Regulation. However, critics argue that this regulatory framework falls short, as it does not cover many important aspects of the crypto industry. The regulation does not touch on NFTs, decentralized finance, and cryptocurrency staking.
Better than nothing
Despite the criticism, some major players believe that the EU's provisions are still better than having no rules at all. MiCA provides a path to registration and defines the boundaries of activity, unlike the ambiguous regulatory landscape in the United States. Due to the repressive measures of regulators who have not developed clear legislation for the new industry, many American companies have begun to seek refuge in other countries.
Are the rules already in effect?
It is expected that the final text of the provisions will be available by the end of June, and the rules will come into force in July of this year. However, their implementation will be phased to allow all participants to adapt in time.
The requirements for stablecoins will be applied from July 2024, while the obligations for service providers will take effect in January 2025.
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