After many years of uncertainty, the European Union has finally approved regulation for cryptocurrencies in the region. Lawmakers voted in favor of the Markets in Crypto-Assets (MiCA) regulation, Thursday 20 March.
This makes Europe the first major jurisdiction to approve a regulatory framework for the crypto industry. MiCA has been in the pipelines since September 2020, but has only received serious consideration now and seeks to protect European users of digital assets.
The law which awaits final approval from the Council of the European Union enshrines environmental sustainability and seeks to prevent money laundering in the crypto industry.
When enforced in 2024, it will require digital asset exchanges and crypto wallet providers to obtain a license to operate within any country in the region.
It will also require stablecoin issuers to hold sufficient reserves to protect users from the recent concerns surrounding stablecoins.
Monitoring Crypto Transactions
After voting for the passing of MiCA into law, the lawmakers have placed the European Securities and Markets Authority (ESMA) in charge of developing the guidelines for implementing it ahead of 2024.
At the same time, the lawmakers voted massively in support of the Transfer of Funds Regulation (TFR).
This law will demand that digital asset operators identify their customers in order to prevent money laundering. The parliament expects that the law will properly tackle the issue of money laundering in the region.
“The Recast of the TFR will oblige crypto-asset service providers to detect and stop criminal crypto flows and also ensure that all categories of crypto companies are subject to the full set of anti-money laundering obligations,” A member of the parliament Earnest Urtasun said.
Europe on its Way to Becoming a Crypto Destination
The crypto industry has suffered at the hands of regulators all over the world, and Europe isn’t left behind in it. As a result, the industry has struggled to thrive in most countries.
The EU unanimously agreeing on legislation to regulate the industry is indeed a critical move towards making the region a crypto hub.
Alisa DiCaprio, the Chief Economist at enterprise blockchain company R3, is convinced that the legislation will position Europe as a leader in digital finance innovation. It will also encourage other jurisdictions to come up with proper regulations soon.
“Regulatory and legal certainty provide the core foundations for any emerging technology to be applied successfully,” she said. “The fact that the EU is moving first to lay these foundations will undoubtedly make it an attractive destination for more companies in the space to set up and invest in,” she added.
Europe is now the latest jurisdiction to enact laws to guide the crypto space after Hong Kong and Australia. Dubai has already established itself as a major crypto hub for a while now.