The European Union has approved a comprehensive set of new rules to regulate the cryptocurrency sector, giving the 27-nation bloc a global lead in this area. The regulations, known as Markets in Crypto Assets (MiCA), were given the green light by the European Council in the final stage of the legislative process, following endorsement by the European Parliament in April. The new rules are expected to be phased in from July 2024.
The tighter regulatory framework is the EU’s response to a string of high-profile cryptocurrency scandals, including the failure of trading firm FTX and the collapse of the TerraUSD stablecoin. It aims to increase transparency and combat money laundering, and will cover stablecoins, digital tokens, trading platforms, and digital wallets, but not bitcoin itself.
According to Swedish Finance Minister Elisabeth Svantesson, whose country holds the rotating presidency of the European Council, the new rules are essential to protect European investors and prevent the misuse of the crypto industry for money laundering and financing terrorism.
Under MiCA, crypto firms must obtain approval to operate in the EU and will be held liable if they lose investors’ assets. Authorities will compile a public list of non-compliant companies. In addition, the rules include provisions to combat market manipulation and insider dealing, while companies issuing or trading crypto assets will have to disclose information on the risks, costs, and charges that consumers face.
The regulations also require major crypto firms to disclose their energy usage, addressing concerns about the carbon footprint of bitcoin mining. While some European countries, including Germany, already have basic crypto regulations, the EU’s new rules will put the bloc at the forefront of global regulation of the cryptocurrency sector.
In contrast, the US has made little progress in enhancing oversight of cryptocurrencies and digital assets, while the UK is still considering feedback on proposed crypto regulations outlined last year.
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