EU authorities agreed on the final form of Markets in Crypto-Assets (MiCA) law, which includes sweeping regulations for various crypto neighborhoods. The document has been in the works for months, with pro-crypto member of the European Parliament Stefan Berger spearheading the process.
“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,” Berger said.
Currently, the bill is pending approval by the European Council and the EU Parliament.
The bill lacks the mining ban EU lawmakers envisioned earlier this year to mitigate the environmental impact of Proof of Work cryptocurrencies such as Bitcoin, and, for now, Ethereum. But environmental protections are still on the EU’s mind, with crypto companies required to report on energy consumption.
On the subject of stablecoins, which became sensitive after the collapse of Terra and its algorithmic stablecoin UST, the EU proposed regulations not so different from those put forward by Senators Lummis and Gillibrand in the US.
All stablecoins will need to be backed by liquid assets so that the issuer can potentially process fiat redemption requests on the entire supply. Additionally, any single stablecoin’s average activity should be under a million transactions per day and €200 million in value.
Under the MiCA, insolvent EU-based crypto companies will be held accountable for the loss of their users’ assets, bringing customer protections. Crypto exchanges will also be required to report all transactions above €1,000, a bitter pill to swallow by privacy advocates.
Cryptocurrencies without a reachable issuer, like Bitcoin, will be subject to limited regulation, including the requirement that exchanges warn customers about the risks related to crypto trading. The MiCA bill also bypasses NFTs, although within the next 18 months the European Commission is supposed to assess whether non-fungible tokens should be regulated separately.