Members of the European Parliament gave their final approval to a package of EU-wide regulations for crypto assets. The legislators also backed the introduction of mechanisms allowing the tracing of cryptocurrency transactions which will also apply to private crypto wallets above a certain threshold.
European Lawmakers Endorse Groundbreaking Crypto Assets Legislation
Europe’s new common rules for the crypto space were given the final green light by the European Union’s legislature. The set, known as Markets in Crypto Assets (MiCA), was passed with 517 votes in favor, 38 against, and 18 abstentions, the EU Parliament’s press service announced Thursday.
The legislation, designed to regulate the supervision, consumer protection and environmental safeguards of digital assets, including cryptocurrencies like bitcoin, was informally agreed upon with the Council, EU’s decision-making body, in June 2022.
The law, arguably the world’s first comprehensive crypto regulatory package, will cover the issue and trade of assets not regulated by existing financial services laws. “Consumers would be better informed about the risks, costs and charges linked to their operations,” the Parliament insisted.
MiCA introduces licensing for crypto service providers operating in the bloc and provides for the establishment of a register for non-compliant companies, with the stated goal of countering risks of market manipulation, money laundering, and terrorist financing. It also aims to reduce the carbon footprint of cryptocurrencies, obliging larger service providers to disclose their energy consumption.
Commenting on the adoption of the legal framework, the rapporteur for the legislation, Stefan Berger, said that MiCA will protect consumers against fraud and allow the sector, hurt by negative events such as the collapse of crypto exchange FTX and other players, to regain trust. He emphasized:
This puts the EU at the forefront of the token economy with 10,000 different crypto assets … This regulation brings a competitive advantage for the EU.
Berger pointed out that the crypto industry in the European Union will have regulatory clarity that does not exist in other jurisdictions like the United States. MiCA will enter into force once formally endorsed by the Council and 20 days after its publication in the EU Official Journal.
European Parliament Approves Rules for Tracing Crypto Transfers
In a separate vote, a majority of 529 members of the Parliament approved additional legislation authorizing the tracing of crypto transactions. It’s meant to ensure that transfers of cryptocurrencies can “always be traced” and blocked, if they are found to be suspicious.
The decision applies the so-called “travel rule,” from traditional finance, to transfers of crypto assets. It implies that information on the source of the asset and its beneficiary must “travel” with the transaction and be stored on both sides.
These provisions will also cover transactions from crypto addresses of private users, the so-called “self-hosted wallets,” if they exceed €1,000 (approx. $1,100) in fiat equivalent and when they transact with “hosted” wallets managed by service providers.
However, the rules will not apply to direct person-to-person transfers, those without the involvement of a provider, or transfers carried out among providers as long as they act on their own behalf, the European Parliament noted in the announcement.
Do you expect other major economies to adopt comprehensive legal frameworks for crypto assets in the near future? Tell us in the comments section below.
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