EU Becomes First Major Jurisdiction to Introduce Comprehensive Crypto Law with Approval of MiCA

On Thursday, the European Parliament approved MiCA (Markets in Crypto-Assets), the new common rules on the supervision, consumer protection and environmental safeguards of crypto-assets, including crypto-currencies, with 517 votes in favour to 38 against and 18 abstentions. It makes the EU the first major jurisdiction in the world to introduce a comprehensive crypto law. Meanwhile, the parliament also approved with 529 votes in favour to 29 against and 14 abstentions a piece of legislation to trace crypto-asset transfers and prevent money laundering.

MiCA will cover crypto-assets that are not regulated by existing financial services legislation. Key provisions for those issuing and trading crypto-assets cover transparency, disclosure, authorisation and supervision of transactions. Consumers would be better informed about the risks, costs and charges linked to their operations. In addition, the new legal framework will support market integrity and financial stability by regulating public offers of crypto-assets.

MiCA also includes measures against market manipulation and to prevent money laundering, terrorist financing and other criminal activities. To counter money-laundering risks, the European Securities and Markets Authority (ESMA) should set up a public register for non-compliant crypto assets service providers that operate in the European Union without authorisation.

In addition, to reduce the high carbon footprint of crypto-currencies, significant service providers will have to disclose their energy consumption.

Next, MiCA will need to go through the final formal vote in the Council of the EU on May 16th to become law, before publication in the EU Official Journal. The rules will start applying next year.

Stefan Berger, lawmaker in the European Parliament, said in a statement, "the European crypto-asset industry has regulatory clarity that does not exist in countries like the U.S. The sector that was damaged by the FTX collapse can regain trust."

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