EU passes world’s first comprehensive crypto framework

The European Parliament has adopted the world’s first comprehensive framework for the regulation of cryptocurrency platforms, voting through the Markets in Crypto Act (MiCA) by 517 votes to 38.

The legislation aims to reduce risk for consumers buying crypto-assets, placing liability on providers if investors lose their assets.

Safeguarding the market and consumers

Transaction authorization and oversight are among the areas that MiCA will regulate, with token issuers and merchants required to ensure transparency with consumers when the regulation comes into effect in 2024.

Furthermore, the new legal framework will aim to support market integrity by regulating public offerings of crypto-assets, while also including measures to reduce money laundering and terrorist financing.

According to MiCA, the European Securities and Markets Authority has been asked to create a public registry for non-compliant crypto-assets operating in the EU without authorization.

EU one step ahead

As the first major market to regulate crypto asset transfers, the EU is a step ahead of other major crypto markets in installing safeguards for investors.

Lead Member of the European Parliament (MEP) for MiCA regulation, Stefan Berger, says: “This puts the EU at the forefront of the token economy with 10,000 different cryptoassets. Consumers will be protected from deception and fraud, and the sector damaged by the FTX collapse can regain confidence.

“This regulation gives the EU a competitive advantage. The European crypto-asset industry has regulatory clarity that doesn’t exist in countries like the US.”

A “landmark moment”

As the first regulatory framework of its kind for the crypto industry, MiCA has been hailed as a “landmark moment” by industry observers such as Nigel Green, CEO and founder of financial advisory deVere Group.

“[MiCA] signaling the maturation of the market and emphasizing that cryptocurrencies are now mainstream. Crypto has now come of age in Europe as it is brought into the regulatory tent and held to the same standards as the rest of the financial system.”

For Green, MiCA will help create confidence in cryptocurrency markets and drive prices, attracting “more institutional investors who bring with them huge levels of capital, experience and influence.”

The EU in the digital age

Green’s views were echoed by Antoni Trenchev, CEO and co-founder of Nexo, who claims MiCA reflects the EU’s wider transition to the digital age.

“Digital assets have long needed a regulatory framework that ensures a level playing field and provides vital investor protection. With MiCA’s approval from the EU Parliament, the crypto industry has finally received this confirmation.

“I believe MiCA makes Europe fit for the digital age and will promote innovation and fair competition in the industry, leading to increased consumer and investor protection and overall financial stability.”