The European Parliament and Council Now in Agreement on the Markets in Crypto Assets (MiCA) Regulations
The European Union has agreed to guidelines to regulate the cryptocurrency industry, whose collapse is causing destruction and calls for tighter scrutiny around the world.
EU negotiators on Thursday hammered out the latest details on an interim deal on a comprehensive package of crypto regulations for the bloc's 27 countries, known as the Markets in Crypto Assets, or MiCA.
The announcement comes a day after the three major institutions adopted steps to combat cryptocurrency money laundering. The new regulations come at the wrong moment for virtual currencies, as bitcoin has had one of its worst quarters in over a decade.
Although virtual currencies are gaining popularity in Switzerland, the global downward trajectory has not affected Swiss cryptocurrency users. At the end of 2021, cryptocurrency trading services' income reached a high of CHF 102 million. The setbacks have not dampened the blockchain industry hype in Switzerland.
The groundbreaking regulation, known as Markets in Crypto-Assets, will make it challenging for a variety of crypto market participants, incorporating exchanges and producers of stablecoins, tokens designed to be tied to current assets such as the US dollar.
With the new regulations, Novice crypto users in Switzerland will no longer have to worry about losing their crypto assets. This regulation is meant to harmonize the European blockchain industry, safeguarding crypto assets and ensuring market fluctuation does not happen.
How Will MiCA Regulate the Risks Associated with Crypto-assets?
MiCA will safeguard customers from some of the hazards involved with investing in crypto-assets and assist them in avoiding fraudulent schemes. Consumers now have extremely limited rights to protection or remedy, particularly when transactions are conducted outside the EU.
With the new legislation, crypto-asset service companies must meet stringent criteria to secure clients' wallets and become accountable if they misplace investors' crypto-assets. MiCA will also encompass any sort of market abuse involving transactions or services, including insider and trading market manipulation.
National regulators are mandated to license cryptocurrency firms and must inform ESMA, the EU's securities watchdog, of significant operations.
Crypto-asset service providers will be held accountable if they fail to secure users' wallets and jeopardize their clients' crypto-assets.
The guidelines would assist new crypto investors in avoiding fraud and scams, which authorities have warned are common in the business.
The European regulations aim to protect financial stability, which is a major worry for authorities following a number of recent crypto-related disasters.
The EU laws, which are still subject to final approval, are slated to go into force in 2024. This includes the provision to deter money laundering, market manipulation, terrorist funding, and other illicit activities.
Before the crypto tracking regulations are finalized, EU institutions are ironing out the technical specifics.