The European Union has given final approval to the first set of rules in the world designed to broadly regulate the cryptocurrency market.
The Markets in Cryptoassets (MiCA) regulation, expected to come into force next year, places a number of rules on firms dealing in digital currencies, including that any organization planning to issue, trade or store crypto assets (ie, digital wallets) be licensed to do such business in the 27-nation bloc.
Along with tackling licensing issues, the EU Council also adopted rules to prevent the use of cryptocurrencies to launder money by extending regulations requiring certain information accompanying the transfer of funds to include crypto assets.
Under the new rules, any organization dealing in cryptocurrency purchase or trading would be required to “collect and make accessible certain information about the sender and beneficiary of the transfers of crypto assets,” regardless of the amount. In other words, say goodbye to the so-called anonymity of cryptocurrencies.
“Today’s decision is bad news for those who have misused crypto-assets for their illegal activities, to circumvent EU sanctions or to finance terrorism and war,” said Swedish Finance Minister Elisabeth Svantesson. “Doing so will no longer be possible in Europe without exposure – it is an important step forward in the fight against money laundering,” Svantesson added. That portion of the new rules will take effect in 2026.
MiCA was approved by the EU Council as part of a larger digital finance regulation package that included the Digital Operational Resilience Act, which seeks to strengthen IT systems at financial institutions, and a proposal for a trial of distributed ledger technology in wholesale applications.
Missing from MiCA are rules that would have banned the use of energy-intensive proof-of-work cryptocurrencies, namely Bitcoin and (at the time) Ethereum, which were removed from a draft version of the rule last year. The proposed and vetoed section would have banned crafting and trading in cryptocurrencies that use “environmentally unsustainable consensus mechanisms,” but MiCA was passed without that language present.
The nod given to MiCA today marks its jumping the final legislative hurdle needed for adoption.
“Recent events have confirmed the urgent need for imposing rules which will better protect Europeans who have invested in these assets, and prevent the misuse of crypto industry for the purposes of money laundering and financing of terrorism,” Svantesson said, likely referring to the late-2022/early-2023 crypto market crash caused by the collapse of FTX, Celsius and other crypto industry chaos.
Lawmakers in the UK have been working through similar crypto regulations since early this year, and US officials have held up the EU and UK regulatory plans as examples of what should be done in the States to better control the lawless industry.
US legislators have levied multiple fines and penalties at crypto firms so far in 2023 as cryptocurrency frameworks akin to MiCA have meandered their ways through the halls of power since late last year. Most recently, New York State Attorney General Letitia James proposed a set of wide-reaching rulesto rein in crypto firms and prevent harm to investors. Those would only apply to residents of New York, however, leaving the other 49 states to establish their own rules or wait for the feds to take action. ®
Original source: https://www.theregister.com/2023/05/17/eu_passes_cryptocurrency_regs/
