- EU approves MiCA regulatory framework for cryptocurrency industry to protect investors from failures like FTX collapse.
- The MiCA licensing policy is expected to become official from the start of 2025.
The EU Parliament voted 517-38 in favor of the new cryptocurrency licensing policy – MiCA. This legislation will introduce stringent rules and supervision for crypto providers, including a separate law requiring digital asset operators to identify their clients for any transfer of their funds to prevent money laundering.
The “travel rule” will cover cryptocurrency transactions, providing customers with information about the source of the assets and the beneficiary. This regulation will apply to transfers worth above €1,000 (around $1,100) from crypto wallet addresses to private users but not to person-to-person transactions.
We are putting safeguards in place that would prevent companies active on the EU market from engaging in some of the practices that led certain cryptoasset operators to collapse. As we have seen in recent months, stringent rules and supervision are very much needed because we’ve had the collapse of projects such as FTX, Terra Luna, Celsius, and Voyager.
The EU has become the world’s first to have comprehensive crypto rules. Mairead McGuinness, the European Commissioner for Financial Stability, Financial Services, and the Capital Markets Union, praised the MiCA legislation as the “first comprehensive crypto rules” and vital standards due to the multiple crashes and scandals that shuttered the industry last year. The legislation on stablecoins is expected to come into effect from July 2024, while the broader rules on crypto providers should become live from January 2025.
Changpeng Zhao, CEO of Binance, praised the EU’s move, arguing that it gives more protection to consumers and fosters innovation of the asset class. In a recent tweet, he highlighted that one of the world’s largest markets is introducing tailored regulations for crypto to protect users and support innovation. Brian Armstrong, CEO of Coinbase, recently urged the American authorities to apply rules on the industry as otherwise, the nation might witness an outflow of companies and talent.