European Parliament Passes Crypto Bill

The European Parliament has overwhelmingly passed Markets in Crypto Assets (MiCA) legislation, potentially giving the Eurozone an advantage as criticism of the US stance over crypto and regulation continues to attract criticism from within the industry.

MEPs approved the bill by 517 votes to 38 with 18 abstentions, to new common rules on the supervision, consumer protection and environmental safeguards of crypto-assets, including crypto-currencies. The draft law, which was agreed informally with the EU Council in June 2022, includes safeguards against market manipulation and financial crime.

MiCA will cover crypto-assets that are not regulated by existing financial services legislation. Key provisions for those issuing and trading crypto-assets (including asset-reference tokens and e-money tokens) cover transparency, disclosure, authorisation and supervision of transactions. In addition, it will support market integrity and financial stability by regulating public offers of crypto-assets.

Finally, the agreed text includes measures against market manipulation and to prevent money laundering, terrorist financing and other criminal activities. To counter money-laundering risks the law could see the European Securities and Markets Authority (ESMA) set up a public register for non-compliant crypto assets service providers that operate in the European Union without authorisation.

Additionally, to reduce the high carbon footprint of crypto-currencies, significant service providers will have to disclose their energy consumption.

“This puts the EU at the forefront of the token economy with 10 000 different crypto assets,” says Stefan Berger, lead MEP of the MiCA regulation. “Consumers will be protected against deception and fraud, and the sector that was damaged by the FTX collapse can regain trust. Consumers will have all the information they need and all underlying risks around crypto-assets will have to be monitored. We secured that the environmental impact disclosure will be taken into account by investors in crypto assets. This regulation brings a competitive advantage for the EU. The European crypto-asset industry has regulatory clarity that does not exist in countries like the US.”

The texts will now have to be formally endorsed by the EU Council, before publication in the EU Official Journal. They will enter into force 20 days later.