European lawmakers are today expected to vote on the Markets in Crypto Assets (MiCA), potentially ushering in a new era of crypto regulation across the bloc.
Officials have debated the finer points of the bill, publicly voicing their support for a licensing regime specifically for digital asset service providers.
The transfer of funds provision has drawn particular attention. It aims to support tracking suspicious digital asset activity — money laundering and terrorist financing — across the European Union.
Transfers exceeding EUR 1,000 ($1,097) from an unregulated or self-hosted platform are expected to be restricted.
“Adding regulatory clarity and clear rules for sure will reduce risks for the business and customers, especially in areas not covered by consumer protection rules,” Ilya Volkov, CEO and co-founder of YouHodler told Blockworks.
Should EU parliamentarians vote in the landmark bill, MiCA will install supervisory provisions for digital assets, consumer protections and even environmental safeguards.
The vote is expected around 8am ET. While a vote was initially slated for February, the bill was delayed until April to allow industry-related firms additional preparation time.
The bill, first introduced in 2020, should come into effect 12 to 18 months after being added to the EU’s registry.
Unintended impact of European Union crypto regulations
In October, the Union’s standing committee reached a preliminary deal (28-to-1), installing the European Securities and Markets Authority as the primary watchdog for digital assets falling outside normal financial regulatory bounds.
In addition to a licensing regime, MiCA intends to establish a system ensuring stablecoin issuers maintain sufficient reserves to support redemptions — a subtle nod to last year’s collapse of Terra’s algorithmic stablecoin, UST.
Joey Garcia, head of public affairs at bitcoin custodian Xapo Bank, told Blockworks that while he welcomes raising standards for digital asset service providers, there was concern that MiCA would govern the asset class too closely.
“What will the implications be for DeFi integrations and crossovers? Similarly, while the categorization of virtual assets in new categories is also constructive and forward-looking, are the rules proportionate to the industry?”
The regulation has been viewed by some as a means to limit the potential for crypto to flourish, though others still believe it could provide a model for competing jurisdictions, including the US.
“There is a widely held misconception within the crypto space that regulation’s purpose is to stifle progress and innovation,” Albert Isola MP, Gibraltar’s Minister for Digital and Financial Services, told Blockworks.
“Importantly maintaining market integrity is paramount and must be considered from the outset.”
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Source: https://blockworks.co/news/european-union-crypto-mica