The European Parliament has approved the much-awaited Markets in Crypto-Asset law (MiCA) in a landslide vote, allowing the European Union to regulate the cryptocurrency industry.
With this regulation, the EU aims to combat money laundering and the financing of terrorism in the crypto market.
Regulatory clarity for EU crypto-asset industry
The approval of the MiCA law will provide regulatory clarity for the European crypto-asset industry, unlike the United States. The law sets out registration rules for exchanges and disclosure rules for new cryptocurrencies before they are listed on exchanges. Firms registering in one of the 27 member states can operate in any EU region.
Additionally, the law requires issuers of a new cryptocurrency to provide a white paper on the project, and crypto platforms’ compliance will be overseen by the European Banking Authority and the European Securities and Markets Authority.
Combating money laundering and terrorist financing
The MiCA law defines interactions between EU and non-EU-based cryptocurrency companies, and the government will adopt an amended version of the Financial Action Task Force’s Travel Rule.
The Transfer of Funds Regulation requires crypto exchanges to identify both ends of a crypto transfer. However, it is important to note that the law does not cover decentralized finance (DeFI) and non-fungible tokens (NFTs).
A final vote awaits in the Council of the EU on May 16 and will be published in the Official Journal of the European Union and enacted in July. Crypto firms will have one to two years to comply with the new regulation. The EU will enforce the amended Travel Rule from January 2025.