The EU Commission’s proposed MICA legislation that will introduce uniform regulatory standards for the crypto industry across EU countries was approved last week by a resounding majority by the European Parliament.
The legislation, which has been under discussion since 2021, will be sent to the European Council for final approval in the coming months.
The proposed law will introduce wide-reaching safeguards and regulations in an effort to protect clients and investors. Under the new legislation, crypto exchanges will have to hold clients’ funds and adequate capital buffers and won’t be able to invest or gamble with clients’ funds. Stablecoin issuers will have to prove to the regulator that their stablecoin is backed 1:1 with cash.
The regulations will also introduce comprehensive anti-money-laundering (AML) and know-your-customer (KYC) regulations and will place particular emphasis on transfers totaling €1,000 and above from self-hosted addresses.
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The regulations will take at least two years to be implemented in each EU member state, with the €1,000 rule coming into effect by 2025.
The European Commission is laying the groundwork for new legislation that will launch the digital Euro. The green light was given by the European Council earlier this month. The following day, the EU Commission issued its consultation process with relevant stakeholders which will end on June 16.
Payment industry specialists and providers, merchant and retail payments providers, payments regulators, and finance intelligence units are among the stakeholders expected to provide feedback to the Commission.
The European Central Bank (ECB) has long pronounced that it’s in favor of a digital euro and recently reiterated that European legislators need to work together on the legislation before it could launch.
The ECB believes that launching the digital euro will help Europe move closer to a widespread roll-out of digital payments. Last month, ECB President Christine Lagarde also remarked on the importance of introducing the digital euro as she encouraged lawmakers to speed up the process.
The EU will adopt the first-ever wide-reaching regulatory framework for the crypto industry and may also be one of the first major international institutions to adopt a digital currency. Despite the EU’s long and clunky legal process, Europe is ahead of the US in introducing a clear-set legal framework for crypto as the US still tries to figure out the direction for its legislation with long and detailed congressional hearings on the subject still ongoing.
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