After two successive postponements, the European Parliament has held the final vote on the Markets in Cryptoassets Act, known as MiCA. Now the legislation, first introduced in 2020, needs the approval of the European Council before becoming effective regulation.
On April 20, immediately after the vote, MiCA rapporteur and Member of the European Parliament Stefan Verger called MiCA “A milestone for the cryptoasset industry.”
Amid regulatory pressures in the United States, the European Parliament approves MiCA, a legal framework for crypto-regulation. This week, a vote by lawmakers confirmed that the European Parliament approves the MiCA law, making this proposal a law by 2024. Just a few hours ago, the approval held in the European Union parliament, approved with 525 votes in favor and 38 against the MiCA bill.
The regulatory framework established by MiCA seeks to mitigate risks and reduce market instability that has left millions of consumers bankrupt. The recently passed bill will create important regulatory mechanisms for the European Union. This would leave the EU ahead of the US and UK in regulatory and legal matters.
The passage of MiCA also becomes a hurdle for the United States. The growing cryptoasset and digital economy industry is strongly questioning where to set up shop after the regulatory instability in the US, this could further motivate and energize the market and new alternatives in the region.
However, not everything is exactly pleasant; the European Parliament approves the MiCA law that, precisely, clarifies the rules of the game both in advertising and in other areas. That said, platforms will be obliged to inform users about the inherent risks of investing in cryptocurrencies.
European Parliament Approves MiCA Law
In traditional markets these practices have been in place for over 50 years (and continue to change to protect consumers). On the other hand, in the new digital markets, users were adrift in terms of regulation.
Furthermore, environmental concerns over questionable practices are another issue addressed by MiCA. Companies of any kind (industry related) will be required to disclose their energy consumption and the impact of their digital assets on the environment. This goes hand in hand with the European Union’s strict policies on environmental damage.
One of the highlights of MiCA is the obligation for companies to back all their assets in stable currencies. This would ensure that, during mass withdrawals, solvency and liquidity would be guaranteed for each and every user.
Additionally, stable currencies that become very large on such platforms will be capped at $200 million per day, a clear restriction on the reign of USDT and USDC.
The Power of ESMA
The European Securities and Markets Authority, or ESMA, will have sufficient powers to ban or intervene crypto platforms if they fail to protect the user and investor. As it has been seen above, these breaches of user and investor protection have created large bankruptcies. This is why ESMA will be empowered to act if necessary. All this will be possible thanks to the legal frameworks established by MiCA.
Mairead McGuinness, who is currently the European Commissioner for financial services, clarified that this legislation could come into force in 2024. Therefore, companies should adapt quickly and be in full compliance with operating all their services in the EU territory.
By Marina Meza
