The European Parliament has approved the Markets in Crypto Assets (MiCA) regulation. Many crypto platforms received the news as a sign that the EU is leading the way in crypto regulation.
The Crypto Asset Markets (MiCA) regulation, approved by the European Parliament, could become a global standard, now that it is expected to affect centralized crypto exchanges doing business in the EU. Furthermore, it could shape crypto regulation in other regions of the world.
As a combined trading bloc equal to one of the world’s largest economies, EU regulations can have global consequences, ranging from data privacy to the shape of contemporary antitrust laws.
From a business perspective, the European Union often demands higher standards than other countries. Thus, being such a large market, the rules that apply in the EU can set the global standard for large multinationals.
After all, why go to the effort of accommodating EU regulations only to set different compliance standards elsewhere? Before MiCA, crypto regulation in the EU was based on pre-existing anti-money laundering (AML) legislation. Also, when it comes to AML legislation, complying with EU rules is critical for your business partners. In the UK, for example, AML rules have remained relatively aligned with those in the EU since Brexit. On that front, regulators across Europe share similar goals.
Notably, the UK has not opted for a dedicated MiCA-style framework for crypto regulation, although on fundamental principles, the two jurisdictions remain in sync, so both the EU and the UK have taken an approach that treats the sector as an extension of the broader financial services industry.
After MiCA, Exchanges Face Europe
Following a meeting with the UK Economic Secretary and Andrew Griffith, Coinbase CEO Brian Armstrong tweeted in support of the UK approach, noting that the country “is moving quickly on sensible regulation of cryptocurrencies.”
In a post by Coinbase, the death of MiCA was described as “a pivotal moment for cryptocurrencies in the region.” The post further noted that the work of European politicians should be an example for others.
Similar sentiments can also be found in the response from other cryptocurrency exchanges. Mark Jennings, Kraken’s head of European operations, said MiCA could soon become “a universal standard for customer protection and business efficiency.”
Meanwhile, Binance CEO Changpeng Zhao tweeted that the regulation overall represents “a pragmatic solution to the challenges we collectively face.”
The US Falling Behind in Regulation
Coinbase’s shift in focus across the Atlantic highlights a lack of regulatory clarity in the US, which threatens to hinder the growth of crypto companies there. Armstrong was in Washington meeting with the SEC, where he stated that Coinbase is pushing for a clear rulebook for the cryptocurrency sector. “The United States cannot afford to be left behind on this important technology,” he stressed, adding that regulators need to set policies before enforcing them.
With companies increasingly exasperated by the failure of the US authorities to offer a way forward, investment in cryptocurrency is turning towards Asia. On April 10, crypto trading platform Bitget announced a $100 million venture fund for the region. Similarly, in March, Hong Kong investment firm ProDigital Futures announced plans to invest $100 million in crypto-focused Asian startups.
By Audy Castaneda
