The approved regulation includes rules to trace crypto asset transfers and prevent their use in criminal activities.
EU Lawmakers have approved a landmark piece of legislation for governing and safeguarding the crypto industry.
Parliament voted 517 votes for and 38 against – and 18 abstentions – for the Markets in Crypto Assets (MiCA). EU lawmakers also voted in favour of legislation that allows the tracing of crypto asset transfers in a similar way to traditional money transfers.
MiCA creates a set of common rules around the supervision of crypto assets and cryptocurrencies. The legislation also creates new rules on consumer protection, market manipulation, financial crime and environmental safeguards.
The EU provisionally agreed on the legislation last June. At the time, Stefan Berger, the lead MEP for MiCA regulation, said it would “put order in the wild west of crypto assets”.
MiCA will cover crypto assets that are not currently regulated by existing financial services legislation. Its provisions cover the issuing and trading of crypto assets, along with the supervision of transactions.
The legislation includes measures to prevent crypto from being used in money laundering, terrorist financing and other criminal activities. MiCA will also make “significant service providers” have to disclose their energy consumption to reduce crypto’s carbon footprint.
The EU also said MiCA will support the integrity and stability of the industry, by regulating public offers of crypto assets.
Speaking on the voting result, Berger said MiCA puts the EU at the “forefront of the token economy with 10,000 different crypto assets”.
“Consumers will be protected against deception and fraud, and the sector that was damaged by the FTX collapse can regain trust,” Berger said. “Consumers will have all the information they need and all underlying risks around crypto assets will have to be monitored.
Certain cryptocurrency exchanges have taken measures to prepare for the arrival of this new crypto regulation. Last August, Zodia Custody was registered in Ireland as a Virtual Asset Service Provider and said this would allow it to service clients across the EU when MiCA comes into force.
Pirate Party criticisms
The texts of these approved laws will have to be formally endorsed by the EU Council, before being published in the EU Official Journal. After this, the legislation will enter into force after 20 days.
However, members of the European Parliament’s Pirate Party have spoken against elements of the new legislation, such as the identification information around the transfers of crypto assets.
Patrick Breyer, MEP of the German Pirate Party, said the rules will “deprive law-abiding citizens of their financial freedom” and said opposition figures have become “increasingly dependent” on anonymous donations in virtual currencies.
“There is no justification for effectively abolishing anonymous virtual payments.” Breyer said. “Where virtual assets have been used for criminal activities in the past, prosecution has been possible on the basis of the current rules.
“Banning anonymous cryptocurrency payments altogether will not have any significant effect on crime. The stated aim to tackle money laundering and terrorism is only a pretext to gain control over our private business.”
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