MiCA: The New Deal for European Data Protection
The European Commission, EU Parliament, and member countries have reached an agreement for MiCA.
On June 30, European Union policymakers came to an agreement on the first major regulatory framework for the cryptocurrency industry.
The Markets in Crypto-Assets (MiCA) legislation will make things harder for crypto exchanges and stablecoin issuers that operate in Europe.
Under the new regulations, stablecoin issuers such as Tether and Circle will have to keep reserves to meet mass redemption requests. They could also face a limit of 200 million Euros in daily transactions, according to CNBC.
The Wild West of Crypto
ESMA has been given additional authority to restrict or ban crypto companies that are not providing enough protection for investors.
European Parliament policymaker Stefan Berger called the industry the "Wild West" and promised to clean it up:
“Today, we put order in the Wild West of crypto assets and set clear rules for a harmonized market that will provide legal certainty for crypto asset issuers, guarantee equal rights for service providers and ensure high standards for consumers and investors.”
MiCA Trilog: Durchbruch! Europa ist der erste Kontinent mit einer Krypto-Asset Regulierung. Parlament, Kommission & Rat haben sich auf ausgewogene #MiCA geeinigt. Für mich als Berichterstatter war wichtig, dass es hier keine Verbannung von Technologien wie #PoW gibt /1
— Stefan Berger (@DrStefanBerger) June 30, 2022
There will also be environmental regulations, with crypto firms having to disclose their energy consumption. Additionally, they will have to detail how tokens impact the environment, which is unlikely to be good news for proof-of-work cryptocurrencies. A proposal put forward in March that would ban PoW mining in the EU was voted down.
Regulators were also worried about anonymity and privacy-focused crypto assets, deciding to reduce the anonymity for such transactions. Money laundering is still a major concern for regulators, especially in light of the sanctions imposed on Russia.
Any transaction between exchanges and individual un-hosted wallets over 1,000 Euro will have to be reported to the authorities.
The Fear of Stablecoin
The EU is particularly worried about stablecoins, and they have good reason to be. The collapse of the Terra ecosystem was a big deal. "The EU is not happy about stablecoins in general," said Robert Kopitsch, secretary-general of the crypto lobbying group Blockchain for Europe.
In a blog post on June 30, stablecoin issuer Circle reacted to the regulations. "Europe's upcoming crypto-assets policy framework will be to crypto what GDPR was to privacy," said Dante Disparte, chief strategy officer at Circle.
Today, the European Union are putting the pens down on MiCA, a comprehensive crypto markets regulatory framework covering the 3rd largest economic area in the world. Today we also launched Euro Coin (EUROC). Our thoughts: https://t.co/FlCIIV8dM8
— Jeremy Allaire (@jerallaire) June 30, 2022
Although the company was generally in favor of the new regulations, they were designed to make life harder for stablecoin issuers. The EU is expected to implement MiCA rules by 2024, beating out the US in regulating the crypto industry.