The European Union has approved the legal text for its landmark Markets in Crypto Asset Regulation (MiCA), marking a significant step in the journey towards a fully authorised and regulated crypto-asset market in Europe.
The European Parliament’s Committee on Economic and Monetary Affairs will now vote to pass the final text on 10 October, before a date is decided for the implementation of the regulation.
The EU said that the lack of an overall regulatory framework for crypto-assets “can lead to a lack of users’ confidence in those assets”, restricting the development of the market and could potentially lead to “missed opportunities in terms of innovative digital services, alternative payment instruments or new funding sources for Union companies”.
As a result, the EU concluded that it was necessary to establish specific rules for crypto-assets, with a view to support innovation and fair competition, while ensuring protection for participants and wider market integrity around the new asset type.
“Capital requirements are to be introduced for providers, with the amount dependant on the size and nature of the service provided.”
The proposed rules lay out provisions on supervision, consumer protection and environmental safeguards for crypto-assets, outlining rules for those issuing, safeguarding and trading the new asset type. Capital requirements are to be introduced for providers, with the amount dependant on the size and nature of the service provided.
“It is important to ensure that the Union’s financial services legislation is fit for the digital age, and contributes to a future-ready economy that works for the people, including by enabling the use of innovative technologies,” the EU said in the regulation. “The Union has a stated and confirmed policy interest in developing and promoting the uptake of transformative technologies in the financial sector, including distributed ledger technology (DLT).”
MiCA also sets out guidelines for crypto-asset service providers, covering custodial and administrative services. The rules establish a best-practice framework, detailing rules around fees, communication and security.
Speaking in June after the provisional text was drawn up, Stefan Berger, the lead MEP on the project, labelled the regulation a European success. “We are the first continent to have a crypto-asset regulation. In the Wild West of the crypto-world, MiCA will be a global standard setter. MiCA will ensure a harmonised market, provide legal certainty for crypto-asset issuers, guarantee a level playing field for service providers and ensure high standards for costumer protection.”
The full text is available to read here.