The European Parliament has passed the Markets in Crypto Act (MiCA), which is the world's first set of comprehensive regulations for the cryptocurrency industry.
The legislation aims to decrease the risks associated with purchasing crypto assets and holds providers accountable if they lose investors' crypto assets. The new rules will demand transparency, disclosure, authorization, and supervision of transactions by crypto platforms, token issuers, and traders.
Additionally, crypto platforms will have to caution consumers about the risks involved with their operations, and the sale of new tokens will be regulated. The legislation also states that stablecoins need to maintain adequate reserves to meet redemption requests, and stablecoins that become too large will be capped at 200 million euros in daily transactions.
The European Securities and Markets Authority (ESMA) will hold the power to ban or restrict crypto platforms that do not adequately protect investors or threaten market integrity or financial stability.
Finally, the new regulations address environmental concerns by requiring companies to disclose their energy consumption and the impact of digital assets on the environment.
“Consistency in implementation around the EU will be key in providing crypto companies with the operational clarity to fuel innovation across Europe and guard against unwitting fragmentation of the Single Market,” Andrew Whitworth, EMEA Policy Director for blockchain firm Ripple told CNBC via email.
In addition, the Parliament passed the Transfer of Funds regulation, with a vote of 529 to 29. This law aims to decrease the level of anonymity associated with the transfer of cryptocurrencies such as Bitcoin and Stablecoins.
The legislative moves put EU ahead of UK and US which currently lack formal rules in the cryptocurrency space
