Officials from the European Union have approved a landmark law that will make life more difficult for crypto exporters and service providers under a single new regulatory framework.
Stefan Berger, Member of the European Parliament and Rapporteur of the MiCA Act – the person designated to report on actions related to the bill – broke the news on Twitter, saying that a “balanced” agreement had been reached, making the European Union the number one continent with crypto-asset regulation.
According to the European Council, the interim agreement, known as the Markets in Crypto Assets (MiCA) framework, includes rules that will cover issuers of unsupported crypto assets, stablecoins, trading platforms and wallets where crypto assets are held.
Bruno Le Maire, the French Minister for the Economy, Finance, Industry and Digital Sovereignty, claimed that the landmark regulation “will put an end to the crypto wild west.”
In the wake of Terra’s dramatic collapse, the MiCA regulation aims to protect consumers by “requiring” stablecoin issuers to build up sufficient liquid reserves.
In a Twitter thread, Ernst Ortasson, a member of the European Parliament, explained that reserves should be “legally and practically isolated” and should also be “fully protected in the event of insolvency.”
You will see a cap on stablecoins of €200 million in transactions per day.
Crypto Twitter users have already described the regulation as unenforceable, with 24-hour daily trading volume (USDT) at $50.40 billion (€48.13 billion) and USDC at $5.66 billion (€5.40 billion) at the time of writing. the report.
It will also be difficult to apply these rules to decentralized stablecoins, such as Dai (DAI).
The agreement came on the same day Circle launched its euro-backed stablecoin – Euro Coin (EUROC).
Crypto-asset service providers (CASPs) will be required to adhere to strict requirements aimed at protecting consumers and may also be held liable if they lose investors’ crypto assets.
Urtasun clarified that the exchanges will be required to provide a technical document for any tokens that do not have a clear issuer, such as Bitcoin (BTC), and will be responsible for any misinformation.
There will also be warnings to consumers about the risks of losses associated with crypto assets and fair marketing communications rules.
Market manipulation and insider trading are also in focus, according to a statement from the European Council:
“MiCA will also cover any type of market abuse related to any type of transaction or service, in particular for market manipulation and insider dealing.”
New Sheriff: ESMA
The interim agreement will also see CASPs need a permit to operate in the EU, with the largest CASPS being monitored by the European Securities and Markets Authority (ESMA).
ESMA is the independent securities markets regulator in the European Union, which was established in 2011.
The new law does not ban Proof of Work (PoW) technologies or include non-perishable tokens (NFTs) in its scope.
However, with regard to NFTs, the European Commission said it would look into this over the next 18 months and could create a “proportional and horizontal legislative proposal” to address emerging risks in the market if it deemed it necessary.
Related: Coinbase Seeks Strong European Expansion Amid Crypto Winter
“The next crypto asset policy framework in Europe will be to encrypt what the GDPR represents for privacy,” Circle’s Despart added.
The interim agreement is still subject to approval by the Council and the European Parliament before it is headed for formal adoption.