The European Union lawmakers have approved a regulation establishing harmonized rules for crypto-assets at the EU level. The effort marks the first time governments have tried to supervise the digital asset industry on such a scale, making the EU the first primary jurisdiction in the world to introduce a comprehensive crypto law.

What is “Markets in Crypto-Assets (MiCA)”?

The Markets in Crypto Assets (MiCA) is a set of crypto-related regulations intended to close existing EU financial services legislation gaps. The regulatory framework will propose new rules and regulations for certain types of crypto-assets, such as Asset Reference Tokens (ARTs), E-Money Tokens (EMTs), and utility tokens.

Under the new regulation, Crypto-Asset Service Providers (CASPs) will be required to gain registration in one of the bloc’s member states to operate within the EU. These platforms, which include exchanges and portfolio management, will be subject to new rules, including governance and liquidity requirements.

MiCA also introduces new rules prohibiting market abuse related to any crypto-asset transaction or service. This includes unlawful disclosure of inside information, insider trading, and actions that can disrupt or manipulate crypto assets.

It is worth noting that MiCA imposes restrictions on issuing and using stablecoins. Specifically, the regulation introduces stricter rules for stablecoin issuers due to related concerns about financial stability and monetary sovereignty.

EU Parliament Approves MiCA

On Thursday, lawmakers in the EU voted 517-38 in favor of MiCA, with 18 abstentions, according to a report by Bloomberg. The legislation will come into effect in July after the bloc’s 27 member states formally approve it, European Financial Services Commissioner Mairead McGuinness reportedly said.

“We are putting safeguards in place that would prevent companies active on the EU market from engaging in some of the practices that led certain cryptoasset operators to collapse,” McGuinness said during the parliament debate.

“As we have seen in recent months, stringent rules and supervision are very much needed because we’ve had the collapse of projects such as FTX, Terra Luna, Celsius and Voyager.”

Notably, different requirements of the new legislation will take effect progressively. For instance, laws governing stablecoins are set to apply from July 2024.

The EU vote on the MiCA regulation was initially scheduled for October last year but was delayed to February due to a series of translating issues. As reported, the vote was again delayed earlier this year due to “technical” issues.

Crypto Community Largely Supports the MiCA Regulation

Many in the crypto industry have welcomed the EU’s approach to proposing a clear digital asset sector regulatory framework. While some have expressed concern about the complexity of the rules, others noted that it could help restore confidence in the sector.

“With the recent events in the crypto industry like the collapse of FTX, Celsius Network and Voyager Digital and of the terraUSD stablecoin, MiCA would help restore the trust that was damaged by the events and bring stability to the sector,” crypto tax platform KoinX said in a recent tweet.

With the recent events in the crypto industry like the collapse of FTX, Celsius Network and Voyager Digital and of the terraUSD stablecoin.

MiCA would help restore the trust that was damaged by the events and bring stability to the sector.

(4/5)

— KoinX (@getkoinx) April 20, 2023

Meanwhile, the EU’s new crypto legislation comes as regulators in the US have been policing the sector through enforcement actions without providing any regulatory clarity. Recently, Coinbase CEO Brian Armstrong warned that the exchange could leave the US if regulators don’t clarify their approach to the digital asset space.

“Anything is on the table, including relocating or whatever is necessary,” he said during the Innovate Finance Global Summit Tuesday after former UK Chancellor George Osbourne asked whether he could see Coinbase leaving the US, The Telegraph reported.

This article originally appeared on The Tokenist

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