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How the EU’s New Crypto Rules Will Affect You



MiCA Regulations

New legislation on markets for crypto-assets (MiCA) that intends to establish a unified legal framework for the global crypto industry was recently accepted by the European Union. This is a significant development for the crypto industry, as it will add more wood to an already out-of-control fire caused by unnecessary governmental meddling.

The Regulatory Grip Continues to Shoke Individual Freedoms

MiCA covers various types of crypto-assets, including utility tokens, asset-referenced tokens, and so-called “stablecoins,” which are pegged to fiat currencies or other assets. It also covers crypto-asset service providers, such as trading platforms, custodial wallets, exchanges, and issuers.

These entities will have to comply with strict requirements on capital, governance, disclosure, supervision, and consumer protection.

One of the main objectives of MiCA is to prevent the misuse of crypto-assets for money laundering, terrorist financing, and other illicit activities. To this end, MiCA aligns with the updated anti-money laundering rules adopted by the EU in June 2022, which extend the scope of the existing legislation to cover crypto-assets and crypto-asset service providers.

MiCA also introduces market abuse rules to prevent insider trading and market manipulation involving crypto-assets.

Another key aspect of MiCA is the environmental impact of crypto-assets. MiCA requires crypto-asset service providers to disclose information on their environmental and climate footprint and mandates the European Securities and Markets Authority (ESMA) to develop technical standards on this matter. 

Moreover, MiCA obliges the European Commission to report on the environmental impact of crypto-assets and to propose mandatory minimum sustainability standards for consensus mechanisms, such as proof-of-work, which are used to validate transactions on some blockchain networks.

MiCA Regulations

The EU Remains Strong in Enforcing their Regulation Doctrine

MiCA is part of a larger digital finance package presented by the European Commission in September 2020, which also includes a digital finance strategy, a Digital Operational Resilience Act (DORA), and a pilot regime for distributed ledger technology (DLT).

The package aims to support innovation and the uptake of new financial technologies while ensuring financial stability and consumer protection.

MiCA enter into force in 2023, after being formally adopted by the European Parliament and published in the Official Journal of the EU. It will have a direct effect in all EU member states, without the need for national transposition. MiCA will also apply to crypto-asset service providers established in third countries that offer their services in the EU, subject to certain conditions.

These new sets of regulations established by the EU are just another attempt by traditional institutions to regulate and scrutinize cryptocurrencies and individual financial freedom.