May 18, 2023
By Anjali Kochhar
The European Union has successfully secured final approval for its wide-ranging set of strengthened regulations governing cryptocurrencies, positioning the 27-nation bloc at the forefront of global efforts to regulate this dynamic sector.
The European Council, in the concluding stage of the legislative process, adopted the regulations known as Markets in Crypto Assets (MiCA). These rules received endorsement from European Parliament lawmakers in April and are expected to be phased in starting from July 2024.
The decision to tighten regulatory oversight in Europe comes in the wake of several high-profile cryptocurrency scandals, including the collapse of trading firm FTX and the implosion of the TerraUSD stablecoin.
The primary objective of these rules is to enhance transparency, combat money laundering, and extend coverage to stablecoins, which are typically pegged to traditional currencies or commodities like gold to reduce volatility compared to regular cryptocurrencies.
While the rules will also apply to other digital tokens, as well as bitcoin-related services such as trading platforms and digital wallets, the regulations do not directly encompass bitcoin itself. Swedish Finance Minister Elisabeth Svantesson, whose country holds the rotating presidency of the European Council, emphasized the pressing need for these rules in light of recent events.
She stated that the regulations aim to safeguard European investors and prevent the misuse of the crypto industry for illicit activities such as money laundering and financing terrorism.
Under MiCA, which has been in development since 2020, crypto companies will be required to obtain approval to operate within the EU and will be held accountable for the loss of investors’ assets. Noncompliant companies will be publicly listed by authorities. The rules not only seek to maintain financial stability but also incorporate measures to combat market manipulation and insider trading.
Companies involved in issuing or trading crypto assets will be obligated to disclose information regarding the risks, costs, and charges faced by consumers, promoting a more informed and secure investment environment.
Prominent cryptocurrency firms will be compelled to disclose their energy consumption, prompted by growing apprehension over the substantial energy usage associated with bitcoin mining and its impact on the carbon footprint of cryptocurrencies.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.