EU Takes Step Toward Crypto Regulation as MiCA Passes

The laws are expected to come into force in early 2024 or later. 

EU Approves MiCA 

The European Union is getting ready to regulate the digital assets sector. 

Members of the European Council approved the text for the Markets in Crypto Assets Regulation (otherwise known as MiCA) framework early Wednesday, in a major step toward establishing rules for how digital asset exchanges and other service providers should operate in EU member states. 

After today’s vote, the European Parliament will also vote on the proposal on October 10 before it’s formally adopted. If agreed upon, it’s expected to come into effect at the start of 2024 at the earliest. 

MiCA proposes regulations for crypto asset service providers, including measures like identity checks and minimum requirements on stablecoin reserves. Mandatory identity checks have been commonplace among crypto businesses hoping to curb money laundering for several years, but stablecoin restrictions have more recently become a point of focus for regulators in the fallout from Terra’s implosion. 

MiCA seeks to impose restrictions on dollar-denominated stablecoins like USDT and USDC—something crypto advocates have taken issue with citing their prominence in the industry over euro-based stablecoins. Wording related to the stablecoin regulations was amended last month, but the harsh restrictions were later added back in after French officials raised concerns about preserving the euro’s sovereignty. 

The European Council isn’t the only regulatory body keeping close tabs on stablecoins and the broader cryptocurrency space this year. The White House also made its biggest move yet in regards to regulating the nascent sector last month, releasing the first framework for regulating crypto assets in the U.S. Published after President Biden signed an executive order on  “Ensuring Responsible Development of Digital Assets,” the paper outlines how the U.S. government is thinking about crypto regulation, calling on agencies like the Treasury and Securities and Exchange Commission to continue monitoring the space over the coming months. Like the European Union, following a months-long bull run and ensuing market collapse, the U.S. has made it clear that it thinks now is the time to start overseeing the asset class. 

Disclosure: At the time of writing, the author of this piece owned USDT, ETH, and several other cryptocurrencies.