EU Takes Step Toward Crypto Regulation as MiCA Passes

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The laws are expected to take effect in early 2024 or later.

EU approves MiCA

The European Union prepares to regulate the digital asset sector.

The members of the European Council approved the text of the Regulation of Markets in Cryptoassets (also known as MiCA) early Wednesday, in an important step towards establishing rules for how digital asset exchanges and other service providers in EU member states should operate.

After today’s vote, the European Parliament will also vote on the proposal on October 10 before it is formally adopted. If agreed, it is expected to take effect in early 2024 at the earliest.

MiCA proposes regulations for crypto asset service providers, including measures such as identity checks and minimum requirements on stablecoin reserves. Mandatory identity checks have been commonplace among crypto firms hoping to curb money laundering for several years, but stablecoin restrictions have more recently become a point of focus for regulators due to the fallout. of the implosion of Terra.

MiCA seeks to impose restrictions on dollar-denominated stablecoins like USDT and USDC, something crypto advocates have had problems with citing its prominence in the industry over euro-based stablecoins. Wording related to stablecoin regulations was changed last month, but the harsh restrictions were added later after French officials raised concerns about preserving the euro’s sovereignty.

The European Council is not the only regulatory body keeping a close eye on stablecoins and the broader cryptocurrency space this year. The White House also made its biggest move yet regarding regulation of the nascent sector last month, releasing the first frame to regulate crypto assets in the US Released after President Biden signed an executive order on “Ensuring the responsible development of digital assets” the document outlines how the US government is thinking about crypto regulation, calling on agencies such as the Treasury and the Securities and Exchange Commission to continue to monitor the space in the coming months. Like the European Union, after a months-long bull run and ensuing market crash, the US has made it clear that it believes now is the time to start monitoring the asset class.

Disclosure: At the time of writing, the author of this article owned USDT, ETH, and several other cryptocurrencies.

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