Image Source: Crypto Slate
In light of the recent collapse in the value of bitcoin, which has increased pressure on the government to control the industry, the European Union has agreed to novel regulations for the industry, EU lawmakers announced on Thursday.
Since national operators in the EU are only needed to demonstrate controls to prevent money laundering, crypto-assets remain mostly uncontrolled globally.
The markets in crypto assets (MiCA) law, which is anticipated to take effect at the end of 2023, was hammered out by representatives of the European Parliament and EU states.
According to Ernest Urtasun, a member of the parliament from the Green Party, MiCA would be the first comprehensive framework for crypto assets in the world and incorporate strict safeguards against market misuse and manipulation.
Using a single base of operations and adhering to capital and consumer protection regulations, the new law grants issuers of crypto assets and suppliers of related services a “passport” to serve clients within the EU.
Major crypto hubs like the United States and the United Kingdom have not yet ratified comparable regulations.
Following the collapse of TerraUSD and luna tokens last month, the value of cryptocurrencies was put under pressure, and this month, major US cryptocurrency lending company Celsius Network froze withdrawals and transfers.
Bitcoin fell to about $17,600 this month and was trading at about $18,900 on Thursday. This is a significant decline from its late-March high of $48,200, as investors wring their hands over losses.
On Thursday, discussions mostly concerned the regulation of crypto-assets and their energy usage.
According to politician Urtasun, EU member states would serve as the primary regulators for cryptocurrency businesses, but the securities watchdog of the bloc, ESMA, will have the authority to intervene if investor protection or financial stability is in danger.
According to reports, supervisory board members will meet in July to discuss MiCA and prospective implementation with regulators from 19 EU member states. As soon as it is in effect, the law will impose obligations on asset service providers to protect investors and inform clients of the potential risks associated with investing in the speculative cryptocurrency market. Additionally, a review period of 18 months would be given to EU officials to evaluate the proposed legal framework and decide whether it covers additional cryptocurrency-related items like nonfungible tokens (NFTs).