The European Parliament has endorsed the world’s first legislative framework intended to govern the burgeoning cryptocurrency sector. The legislative body has voted 517 to 38 in favour of the Markets in Crypto Act (MiCA), marking a significant milestone in the global regulation of digital assets.
The newly ratified act seeks to mitigate risks associated with cryptocurrency investments and holds providers accountable for any losses incurred by investors if they lose their digital assets.
The comprehensive legislation imposes a wide array of stipulations on cryptocurrency platforms, token issuers, and traders, emphasizing the importance of transparency, disclosure, authorization, and transaction supervision, according to a statement released by the EU Parliament.
Under MiCA, platforms are mandated to inform consumers about potential risks linked to their services, and the issuance of new tokens will be subject to regulatory oversight. Stablecoins including Circle’s USDC and Tether’s USDT will have to maintain sufficient reserves to fullfil redemption requests in case of large-scale withdrawals. Those with a large market presence may face daily transaction limitations.
The European Securities and Markets Authority (ESMA) has been granted the authority to intervene and impose bans or restrictions on cryptocurrency platforms deemed to inadequately protect investors or pose a threat to market integrity or financial stability.
Addressing the environmental implications of digital assets, MiCA obligates firms to disclose their energy consumption and the overall environmental impact of cryptocurrencies.
Separately, the European Parliament approved a law diminishing the anonymity associated with crypto transactions. The regulation extends the application of the “travel rule” to digital asset transactions to combat money laundering, and means that transfers between exchanges and self-hosted wallets above €1,000 must be reported.
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- Source: https://www.cryptocompare.com/email-updates/daily/2023/apr/21/
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