EU passes landmark MiCA crypto law

Friday 1 July 2022 11:21 CET | News

The European Commission, EU lawmakers and member states have agreed on a landmark law, known as Markets in Crypto-Assets, or MiCA, designed to make life tougher for players in crypto.

The move came a day after the three main institutions finalized measures aimed at stamping out money laundering in crypto. Among the affected players one can find exchanges and issuers of so-called stablecoins, tokens that are meant to be pegged to existing assets like the USD.

Under the new rules, stablecoins like tether and Circle’s USDC will be required to maintain ample reserves to meet redemption requests in the event of mass withdrawals. Stablecoins that become too large also face being limited to EUR 200 million in transactions per day.

The European Securities and Markets Authority, or ESMA, will be given powers to step in to ban or restrict crypto platforms if they are seen to not properly protect investors, or threaten market integrity or financial stability.

MiCA will also address environmental concerns surrounding crypto, with firms forced to disclose their energy consumption as well as the impact of digital assets on the environment. The rules won’t affect tokens without issuers, like Bitcoin, however trading platforms will need to warn consumers about the risk of losses associated with trading digital tokens.

Non-fungible tokens (NFTs), which represent ownership in digital properties like art, were excluded from the proposals. The EU Commission has been tasked with determining whether NFTs require their own regime within 18 months.

Separately, regulators also agreed on measures that would reduce anonymity when it comes to certain crypto transactions. Authorities are deeply concerned about exploitation of crypto-assets for laundering ill-gotten gains and evasion of sanctions — particularly after Russia’s ongoing invasion of Ukraine.

Transfers between exchanges and so-called ‘un-hosted wallets’ owned by individuals will need to be reported if the amount tops the EUR 1.000 threshold, a contentious issue for crypto enthusiasts who often trade digital currencies for privacy reasons.

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Keywords: crypto, regulation, stablecoin, NFT
Categories: DeFi & Crypto & Web3
Companies: European Commission
Countries: Europe
This article is part of category

DeFi & Crypto & Web3

European Commission

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