EU Lawmakers Pass Crypto Assets Regulation Bill
The European Parliament Committee on Economic and Monetary Affairs voted Monday to advance a version of the much-debated Markets in Crypto Assets bill, or MiCA. The bill is now headed into final negotiations with the European Commission, the Council of the European Union and the European Parliament.
ECON passed the crypto framework policy in a vote of 28 in favour and one against. National representatives in the European Council voted through the proposal last week. Then, after translating the text into the EU’s more than 20 official languages, the next step towards formal adoption of the legislation comes with a final vote in a full European Parliament.
MiCA includes a 12-18 month adaptation period to prepare for the new laws set in place, which means that the laws could take effect in full at the start of 2024 at the earliest.
The MiCA legislation, first introduced in 2020, aims to provide a regulatory framework for digital assets for member states in the EU by 2025. The EU-wide regulatory framework will grant passporting rights for crypto firms working across the continent.
The proposal offers a bespoke legislative regime for crypto assets and relevant service providers not covered elsewhere in the EU financial services regime. The initial draft had included explicit language that would have banned proof-of-work-based cryptocurrencies like Bitcoin, but due to energy consumption concerns this provision was struck after an outcry from industry leaders.
The development comes nearly two years after the European Commission published the first EU legislative framework for crypto assets, which was as part of the broader policy initiative on digital finance. In addition, the MiCA will offer a pilot regime for crypto-related market infrastructures, which represents a so-called ‘Sandbox’ approach. The term has particular relevance for the crypto industry, and the EU scheme was described as a controlled environment under which new firms or new ventures from established brands would be able to live test their ideas.
Nevertheless, European regulators have yet to stake out the DeFi territory and its various applications. Recent news coverage has also highlighted the emergence of Non-fungible Tokens (NFTs). That said, the regulation of these transformative technologies is blurry. There is no such federal agency that has clear authority over a particular DApp, NFT, or even the entire industry.
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By George Rossi
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