EU licensed the world´s first rules for crypto business

The EU has been planning up a law called the Markets in Crypto Act (MiCA) for almost three  years. The idea is to regulate digital assets like stablecoins and bitcoin to protect investors and put an end to tax evasion and money laundering.

Last month, the European Parliament gave a big thumbs up to the MiCA law. It was a landslide victory, with a whopping 517 votes in favor and only 38 against. This law could be a game-changer because it's the first time governments are really stepping in to regulate the crypto industry on a massive scale.

The passage of the markets in crypto-assets (MiCA) regulation brings for the first time EU-wide regulatory oversight to the crypto market.

National authorities will have three-months to develop the necessary authorisation framework for crypto businesses who wish to do business.

For the largest cryptocurrency organisations national governments will be required to regularly transmit information to the European Securities and Markets Authority (ESMA).

The new rules will potentially have a large impact on crypto casinos and other gaming businesses active in the space.

MiCA AML guidelines

In order to prevent duplication with the European Union’s recently passed AML framework, which included rules governing cryptocurrency, MiCA largely doesn’t touch on money laundering.

However, the new rules do include provisions outlining that the European Banking Authority (EBA) be required to maintain a list of non-compliant crypto businesses.

MiCA also requires that organisations who conduct cryptocurrency activities, where the parent company is located in a countries listed on the EU list of states that are high-risk for money laundering and on the EU list of non-cooperative jurisdictions for tax purposes, implement “enhanced checks” in line with the EU AML framework.  

“I am very pleased that today we are delivering on our promise to start regulating the crypto-assets sector,” said Swedish finance minister Elisabeth Svantesson.

“Recent events have confirmed the urgent need for imposing rules which will better protect Europeans who have invested in these assets, and prevent the misuse of crypto industry for the purposes of money laundering and financing of terrorism.”

Development of cryptocurrency framework

The European Commission initially presented the proposed rules in September 2020. MiCA is part of a wider digital finance package that aims to “develop a European approach that fosters development and ensures financial stability and consumer protection”.

In addition to MiCA, the package includes a digital finance strategy and a Digital Operational Resilience Act (DORA) that also covers crypto businesses.

“Recent developments on this quickly evolving sector have confirmed the urgent need for an EU-wide regulation,” said French minister for the economy, finance and industrial and digital sovereignty Bruno Le Maire when the rules were first proposed.

“MiCA will better protect Europeans who have invested in these assets, and prevent the misuse of crypto-assets, while being innovation-friendly to maintain the EU’s attractiveness. This landmark regulation will put an end to the crypto wild west and confirms the EU’s role as a standard-setter for digital topics.”

By Zak Thomas-Akoo