The first major regulatory framework in place for the cryptocurrency industry was reached by policymakers from the European Union on June 30th.
Markets in Crypto-Assets legislation (MiCA), will make it more difficult for stablecoin and crypto exchanges to operate in Europe.
The new regulations will require stablecoin issuers like Circle and Tether to have reserves in place to meet mass redemption requests. CNBC reports that they could face daily transaction limits of 200,000,000 Euros.
Wild West Crypto
The European Securities and Markets Authority has been granted more power to ban or restrict crypto companies not doing enough to protect investors.
Stefan Berger, a European Parliament policymaker, called the industry the “Wild West” and promised to clean it up.
“Today we have brought order to the Wild West of crypto assets by setting clear rules for a harmonised market that will provide legal certainty to crypto asset issuers, guarantee equal rights to service providers, and ensure high standards and transparency for investors and consumers.”
MiCA Trilog: Durchbruch! Europa ist der erste Kontinent mit einer Krypto-Asset Regulierung. Parlament, Kommission & Rat haben sich auf ausgewogene #MiCA geeinigt. Fur mich als Berichterstatter war wichtig, dass es hier keine Verbannung von Technologien wie #PoW gibt /1
— Stefan Berger (@DrStefanBerger) June 30, 2022
Additionally, there will be regulations regarding the environment. Crypto firms will have to disclose their energy use. They will also have to disclose how tokens affect the environment. This is not likely to be favorable for proof-ofwork cryptocurrencies. In March, a previous proposal to ban PoW-mining in the EU was defeated.
Regulators were also concerned by anonymity and privacy-focused cryptocurrency assets. They agreed to lower anonymity for such transactions. Regulators are still concerned about money laundering, particularly in light of sanctions imposed against Russia.
Transactions between exchanges and un-hosted wallets will have a limit of 1,000 Euros. Anything beyond this limit must be reported to authorities.
Stablecoins are particularly troubling for EU lawmakers, especially after the Terra ecosystem collapse. Robert Kopitsch, secretary-general of Blockchain for Europe’s crypto lobbying group, stated that stablecoins are not well received by the EU.
Circle, a stablecoin issuer, posted a response to the regulations in a blog post published June 30. Circle’s chief strategy officer Dante Disparte stated that Europe’s new crypto-assets policy framework would be for crypto what GDPR was for privacy.
The European Union is launching MiCA today, a comprehensive regulatory framework for crypto markets that covers the 3rd largest economy in the world. We also launched Euro Coin today (EUROC). Our thoughts: https://t.co/FlCIIV8dM8
— Jeremy Allaire (@jerallaire) June 30, 2022
Although the company welcomed the new regulations, it noted that they were intended to make it harder for stablecoin issuers. As Uncle Sam is not able to regulate the crypto industry, the EU will likely roll out the new MiCA rules by 2024.
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