The European Parliament has approved its Markets in Crypto-Asset law (MiCA), allowing the European Union to regulate the crypto industry.
After the approval of the much-delayed MiCA Law, the European Union will be able to regulate the cryptocurrency industry in its fight against money laundering and the financing of terrorism. Lawmakers voted 517-38 in favor.
A spokesperson for the Group of the European People’s Party, Stefan Berger, said:
“With the MiCA regulation, the European crypto-asset industry has a regulatory clarity that countries like the United States do not have.”
MiCA sets out registration rules for exchanges and disclosure rules for new cryptocurrencies before exchanges list them. Firms registering in one of the 27 member states can operate in any EU region
MiCA also requires issuers of a new cryptocurrency to provide a white paper on the project. The European Banking Authority and the European Securities and Markets Authority will oversee crypto platforms’ compliance.
MiCA also defines interactions between EU and non-EU-based cryptocurrency companies as part of its anti-money laundering thrust. The government will adopt an amended version of the Financial Action Task Force’s Travel Rule. This rule, Transfer of Funds Regulation, requires crypto exchanges to identify both ends of a crypto transfer.
Notably, the bill does not cover decentralized finance (DeFI) and non-fungible tokens (NFTs).
The bill awaits a final vote in the Council of the EU on May 16. It will then be published in the Official Journal of the European Union and enacted in July. Crypto firms will have one to two years to comply. The EU will enforce the amended Travel Rule from January 2025.
MiCA Bill Draws Both Applause and Criticism
Industry players have welcomed the new crypto regulations while conceding that compliance will take some work.
Binance CEO Changpeng Zhao applauded MiCA, calling it “a pragmatic solution to the challenges we collectively face. We’re ready to make adjustments to our business over the next 12–18 months to be in a position of full compliance.”
Binance’s France office is one of its largest physical presences, employing 150 people in less than one year. Stablecoin issuer Circle recently set up shop in Paris.
Coinbase’s vice president for business development, Nana Murugesan, said the firm would use MiCA to adopt a “pan-European block strategy” rather than seeking licenses in multiple states.
Coinbase recently secured a license from the Bermuda Monetary Authority, applauding the regulatory environment as one with a “high level of rigor, transparency, compliance, and cooperation.” Its CEO, Brian Armstrong, earmarked the U.K. as a jurisdiction with a progressive attitude to digital assets.
MiCA critics have argued that the bill would not have prevented the crypto collapses of 2022.
ECB board member Elizabeth McCaul said the bill would not have considered FTX and Binance as notable crypto service providers.
She noted that revisions should consider trading volume and assets under the custody of an entire crypto conglomerate rather than a single local entity.
Ernest Urtasan, a MiCA shadow representative, argued that EU lawmakers must complete MiCA with additional laws to address “important regulatory challenges.”
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