EU passes crypto regulation as it hopes to set global standard

The European Union officially passed its Markets in Crypto Assets (MiCA) regulation after lawmakers in the European Parliament approved the rules. 

Policymakers finalized the crypto regulation, which they hope will be a “global standard-setter” and a magnet for digital asset businesses. MiCA focuses on the centralized points of the crypto industry and provides clarity over the scope and definitions of crypto regulation. The landmark legislation has divided opinion across the crypto space and traditional regulatory landscape while also attracting the attention of jurisdictions that have yet to legislate.

Crypto Asset Service Providers have more clarity under MiCA. If a firm has a license in one EU member state, it now legally has access to the whole EU market. Moreover, traditional finance firms can now choose licensed partners to work with when developing their crypto solutions. 

The closest thing the crypto industry has to certainty is MiCA in Europe, Curtis Ting, Senior Managing Director for Global Operations at crypto exchange Kraken, told The Block. It offers clarity, but it’s not a definitive regulation, he noted. Ting said there likely won’t be a flight to Europe by crypto firms, saying what Europe leads, the U.S. will help to define.

Word on the street

Sean Tuffy, a financial regulatory expert based in Ireland, was skeptical that the new law would attract companies as much as EU officials hope when he spoke to The Block ahead of today’s vote. 

“You hear some chatter about people moving to Europe, but they’ve never dealt with European regulations, and they’re not exactly the easiest to navigate,” said Tuffy, who added that MiCA clears any potential remaining gray areas in EU securities laws for digital assets.  

Tuffy acknowledged that U.S. policy developments could make Europe more attractive to some companies but doubted there would be a significant exodus across the Atlantic.  

“I don’t think it will kick off any huge acceleration in Europe,” he said, citing U.S. regulations as present, just not embraced by the industry. “It’s not that there aren’t regulations, it’s that they don’t like the regulations that there are,” Tuffy continued, noting the comparison being made by crypto advocates between the EU and the U.S. 

Bittrex CEO Oliver Linch, whose exchange was hit by a U.S. Securities and Exchange Commission lawsuit this week, said, on a high level, MiCA “couldn’t come soon enough.” He views the regulation through two lenses, externally and internally. Externally the bloc lost some of its initiative thanks to delays, it could have been a real “trailblazer,” he told The Block before the SEC suit was filed.

Internal EU competition could heat up now as crypto firms might look to relocate to bigger European markets thanks to regulatory clarity, he said. Smaller nations, like Malta, which have been favored by some up until now, could lose out. 

Delays and linguistic hoops

The European Parliament was originally slated to vote on the legislation in November, but this was then delayed.

The draft first had to be translated into the 24 official EU languages. As the text is technical and lengthy, the regulation’s adoption was pushed to early 2023. In January, it was pushed out to now. The “technical” delays were most likely caused by issues translating the regulations into the 24 official languages of the bloc, a spokesperson told The Block at the time. 

The legislation will come into force in July once the 27 member states formally approve it. 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Source: https://www.theblock.co/post/227309/mica-european-union-crypto-regulation-passes?utm_source=rss&utm_medium=rss