The European Union has taken a major step towards regulating the crypto industry by approving two new laws that aim to ensure consumer protection, market integrity and financial stability. The European Parliament voted in favor of the Markets in Crypto Assets (MiCA) regulation and the Transfer of Funds regulation on Thursday, April 20, 2023.
The MiCA regulation establishes a comprehensive framework for the issuance, provision and supervision of crypto assets and crypto asset service providers in the EU. It covers various types of crypto assets, including cryptocurrencies, stablecoins, utility tokens and security tokens. It also introduces safeguards against market manipulation, financial crime and environmental impact of crypto assets.
The Transfer of Funds regulation requires crypto asset service providers to identify their customers and collect information on the originator and beneficiary of crypto asset transfers. This is to prevent money laundering, terrorist financing and other illicit activities. The regulation also applies to transfers above €1000 from un-hosted wallets, which are crypto asset wallets that are not managed by a service provider.
The two laws are part of the EU’s Digital Finance Strategy, which aims to foster innovation and competition in the digital finance sector, while ensuring a high level of consumer protection and financial stability. The laws will enter into force 20 days after their publication in the Official Journal of the EU and will be applicable 18 months later.
The crypto industry has welcomed the new regulations as a positive step towards legal clarity and harmonization in the EU. However, some stakeholders have also raised concerns about the potential compliance costs and technical challenges of implementing the new rules. The European Commission and the European Banking Authority will provide guidance and support to facilitate the transition to the new regulatory regime.