European Union crypto customers are at the mercy of national regulators as the EU Parliament postpones the draft of its Markets in Crypto Assets bill for the second time.
According to a person close to the matter, the draft’s release has been postponed until April 17, 2023, due to delays in translating the 400-page document into the bloc’s 24 languages. Under EU law, all citizens have a right to communication and documentation in one of the bloc’s official languages.
MiCA Will Only Come Into Effect Sometime in 2024
This new delay marks the second postponement since Nov. 2022’s announcement that the 400-page draft would be released in Feb. 2023 after being finalized in Oct. 2022.
According to requisite legal procedure, the European Parliament will debate MiCA in a plenary sitting in mid-April 2023. After the sitting, lawmakers will take 12 to 18 months to draft the bill’s technical specifications. As a result, the bill may only take effect in 2024.
Designed to bring regulatory uniformity throughout the EU block, the new bill compels crypto asset issuers to comply with anti-money laundering and market manipulation rules.
“The lack of an overall Union framework on crypto-assets could… lead to regulatory fragmentation, which would distort competition in the Single Market, make it more difficult for crypto-asset service providers to scale up their activities on a cross-border basis and would give rise to regulatory arbitrage,” the bill warns.
The bill also mandates consumer protection for crypto assets, including stablecoins, outside the EU’s existing financial services laws. In addition, stablecoin issuers must hold 100% reserves and implement a complaints procedure. Miners must report their energy consumption to mitigate climate concerns.
Once the bill is law, domestic regulators must enforce it at the national level. EU lawmakers originally proposed MiCA in 2020.
EU Crypto Investors at the Mercy of National Regulators
The delay in releasing the bill in the bloc’s 24 languages may not materially change the risk landscape for European crypto investors investing in offshore exchanges.
After the fallout of FTX, several industry experts and lawmakers, including European Banking Authority head José Manuel Campa, admitted that the bill had “blind spots.”
Specifically, the banker pointed out that the bill does not prevent EU citizens from transaction with overseas crypto companies. MiCA only requires a firm’s compliance with one national authority to offer services to the entire bloc. Cypriot regulators suspended the EU license of Bahamian exchange FTX’s EU business unit in Cyprus. This suspension came shortly after the exchange filed for bankruptcy in Nov. 2022.
French central bank governor has asked the French government to enforce strict compliance while the bloc awaits MiCA.
“France should switch as soon as possible to the compulsory authorization of DASPs (digital asset service providers) rather than simply requiring their registration,” said Francois Villeroy in his New Year’s speech on Jan. 5, 2023.
France’s markets watchdog, the Autorité de Contrôle Prudentiel et de Résolution (ACPR), authorized Binance to operate as a Digital Asset Service Provider in May 2022.
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