The EU accepts legislation to control the “Wild West” cryptocurrency market
On what is perhaps the first major regulatory framework for the cryptocurrency industry in Europe, EU authorities were able to reach a consensus.
After hours of discussions, a settlement was reached in Brussels by the EU legislators, European Commission, and member states. The action was taken one day after the EU’s three major institutions published policies intended to combat cryptocurrency money laundering.
With bitcoin experiencing its worst quarter in more than a decade, the new regulations are released at a challenging time for digital assets.
The significant regulation, Markets in Crypto-Assets, often known as MiCA, is intended to make life more difficult for a variety of participants in the cryptocurrency sector, including exchanges and issuers of so-called stablecoins.
Stablecoins like tether and Circle’s USDC will need to keep enough reserves on hand to fulfil redemption requests in the case of a large number of withdrawal requests under the new rule. Additionally, daily transactions for too-large stablecoins are capped at 200 million euros.
The new regulation provided the European Securities and Markets Authority the discretionary authority to intervene and restrict or ban cryptocurrency platforms if it is determined that they are not adequately protecting investors or endangering the integrity of the market or financial stability.
The new regulations will also address environmental concerns relating to cryptocurrencies by requiring companies to disclose their energy usage and the environmental effects of their crypto assets.