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

Binance and other cryptocurrency exchanges have allegedly helped governments circumvent sanctions. The governments of the world are not idle in the face of this problem, but they have a lot of work ahead. It will not be easy to stop illicit activity without invading legitimate crypto transactions.

According to mounting evidence compiled by Chainalysis, cryptocurrencies are being used to evade economic sanctions. This is not a new problem, but it is escalating.

A large portion of the illicit funds in recent months have flowed between Binance and Iran’s largest cryptocurrency exchange, Nobitex. Reportedly, most of the transactions were made in the low-profile cryptocurrency TRON, making it easy for users to hide their identities.

Sanction Hunters

According to Reuters, based on data compiled by Chainalysis, the flow of transactions between Binance and Iran’s largest exchange, Nobitex, allowed Iranian companies to circumvent sanctions and conduct about $8 billion worth of transactions.

In addition, three-quarters of the funds were in the form of TRON, a “low-profile” cryptocurrency that helps users remain anonymous and offline, thus fostering clandestine and criminal operations.

Chainalysis stated in a recent preview of its 2023 Crypto Crime Report that last year, illicit transactions involving crypto increased for the second year in a row. In total, they reached $20.100 million, the highest figure in history. According to the data, 44% of that total flow of deals was activity involving sanctioned governments or organizations.

Regulators Target Crypto Addresses

Governments and law enforcement agencies are not sitting idly by on the problem, the JD Supra report makes clear. They are cracking down on those who flout economic sanctions by using crypto assets.

The US Office of Financial Assets Control (OFAC) has not only imposed sanctions on violators but has also expanded its operations to target cryptocurrency addresses linked to bad actors. Additionally, in the UK, lawmakers introduced regulations requiring companies to report any breach of OFAC-imposed financial sanctions.

Sanctions are Strengthened

According to JD Supra, as the trends worsen, governments and other regulators may have revised their approach. They will have to intensify their enforcement efforts to ensure the sanctions stick.

A stricter approach could help stem the flow of illicit transactions and money laundering. However, the report makes it clear that this will not be a quick and easy solution, as the problem is complex, so issues of regulatory overreach arise.

Officials must exercise caution when going after sanctions violators so that they do not trample on the rights of legitimate cryptocurrency users.

On the downside, more restrictive regulation could be seen, such as OFAC’s decision to sanction the Tornado Cash software protocol, which could create potential repercussions for legitimate actors that interact with it.

The good news is that according to Chainalysis, cryptocurrency services are generally mostly cooperative in the face of requests for help from governments. Thus, exchanges know that it does not help them that rogue states that violate sanctions sully the name of cryptocurrencies.

In short, regulating cryptocurrencies to ensure compliance with economic sanctions is a complex task. It requires collaboration between governments and regulators, as well as the cooperation of crypto exchanges. Only then there will be the hope of curbing the use of cryptocurrencies to evade economic sanctions.

By Audy Castaneda