The world’s first comprehensive set of rules intended to regulate the cryptocurrency business has already been passed by MPs in the European Parliament. The Markets in Crypto Act, or MiCA, was passed by the EU Parliament last Thursday with 517 votes in favor and 38 votes against.
The aforementioned legislation is designed to try and lower risks for consumers purchasing cryptocurrency assets, which essentially means that providers may be held accountable if they misplace investors’ cryptocurrency assets.
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MiCA Taking Into Effect
According to the EU Parliament, the rules place a variety of obligations on cryptocurrency platforms, token issuers, and dealers around openness, disclosure, authorization, and transaction oversight. Additionally, customers would need to be informed about the dangers associated with the activities of the relevant platforms, and the sale of new tokens would be subject to regulation.
Additionally, the same set of regulations would call for stablecoins like Tether and Circle’s USDC to keep enough reserves on hand to fulfill redemption requests in the case of a wave of withdrawals. Stablecoins that become too big will only be able to conduct 200 million euros worth of transactions each day.
In addition, the aforementioned set of rules will enable the European Securities and Markets Authority, or ESMA, the authority to intervene and ban or restrict cryptocurrency platforms that are found to be inadequately protecting investors or endangering market integrity or financial stability.
In addition, MiCA was able to address environmental issues that have persisted in the cryptocurrency community for a long time. Due to MiCA, businesses are now required to declare both their energy usage and the environmental effect of their digital assets.
MiCA to Take Effect by 2024
The measure was approved on Thursday, and European Commissioner for Financial Services Mairead McGuinness praised the decision and predicted that the regulations would take effect “from next year.”
EMEA policy director for blockchain firm Ripple, Andrew Whitworth claimed that the parliamentary blessing marked “an important milestone for the crypto industry around the world.” He further claimed via email that “Consistency in implementation around the EU will be key in providing crypto companies with the operational clarity to fuel innovation across Europe and guard against unwitting fragmentation of the Single Market.”