MiCA will mark the end of the Crypto ‘Wild West’: EU lawmakers

EU lawmakers say new cryptocurrency regulations in the region will end the industry’s “Wild West” era and restore confidence, following the high-profile collapses of last year.

Markets in Crypto Assets (MiCA) will go to a vote in the European Parliament in Strasbourg tomorrow, marking an important milestone in the proposal’s passage into law.

Ahead of the vote, parliamentarians debated the merits of the package in the chamber today, with several hailing the introduction of a legal framework as a major step forward for the bloc.

Ernest Urtasun, a Spanish MEP who was one of the members tasked with putting together the legislation, said MiCA would “mark the end of the Wild West era for the unregulated world of crypto-assets”.

“For over a decade, the lack of regulation has resulted in huge losses for many first-time investors and provided a safe haven for fraudsters and international criminal networks. MiCA represents an important and necessary first step in bringing the crypto sector under regulatory oversight.”

Stefan Berger, the German MEP who was the main architect of the regulation, said it would put the EU “at the forefront of the token economy”, and would “restore the trust damaged by the FTX case”.

Several other members who spoke in support of MiCA also mentioned the catastrophic collapse of FTX. Finance Commissioner Mairead McGuinness even said that had FTX been under EU jurisdiction, “many of their practices would not be allowed”, pointing to rules in MiCA that require companies to disclose conflicts of interest and not use client funds.

Politicians express concerns

While around a dozen parliamentarians voiced their support for the proposal, there was also some dissent and backlash.

Irish MEP Chris MacManus said he supported MiCA because of its emphasis on transparency and consumer protection, but that his own opinion of crypto is not high.

“I have no interest in creating a market for, or promoting the use of, crypto-assets,” he said. “At their worst, they are pyramid schemes, used by criminal gangs to launder money, defraud working people, and they can waste enormous amounts of energy without purpose.”

Meanwhile, Dutch MEP Paul Tang compared crypto to an episode in his own country’s history: the tulip mania of 1637, an early financial market bubble.

“The bubble burst, savers and speculators and investors were left in ruins,” he said. “The similarities to crypto are strong. Nobody knows what they’re going to use them for, but they’re the next hot thing.” However, he admitted that tulips are now part of Dutch culture, and said that perhaps crypto could achieve “the same” one day.

Objections were also raised by Gunnar Beck, a German MEP who said the EU “criminalises decentralized finance and its users” by requiring more transactions to be reported to relevant authorities. “The EU is establishing a total financial surveillance state,” he added.

Many MEPs spoke of the need to keep the regulations relevant, and avoid falling behind technological developments.

“Europe missed the innovation train when it came to the internet,” said Portugal’s Lídia Pereira. “It is not sufficient now to just take the train, we must be the drivers of this new era.”

If adopted by Parliament tomorrow, MiCA will receive final approval from the European Council in May before being officially published. The rules for stablecoins will come into effect in July next year, but providers will have more time to get started on some other requirements that won’t come in until January 2025.