First of its Kind: EU Sets Comprehensive Crypto Standards

• Financial

The crypto industry has been eagerly awaiting regulatory clarity, and the European Union has stepped up to the plate. The EU Parliament has officially given its consent to the MiCA (Markets in Crypto Assets) regulatory framework, which sets clear standards in the rapidly growing crypto industry.

The law will come into effect starting in 2025, bringing much-needed protection to investors in the wake of recent crypto exchange collapses.

First Comprehensive Set of Rules in the World

The EU Parliament voted overwhelmingly in favor of the new licensing policy, with 517 votes in favor and only 38 against.

The vote supports another bill that requires digital asset operators to identify customers transferring funds in order to prevent money laundering. The "travel rule" used in traditional financial markets will now cover cryptocurrency transactions, providing users with information from the source of the funds to the recipient.

The rules will apply to transactions of more than 1,000 euros to private users, but not to "person-to-person" transactions. Mairead McGuinness, EU Commissioner for Financial Stability, Financial Services, and Capital Markets Union, referred to the MiCA regulation as "the first comprehensive set of rules in the world." She highlighted the importance of these standards, given the multiple downturns and scandals that have plagued the industry in recent years.

McGuinness stated, "We’re protecting consumers and safeguarding financial stability and market integrity. The rules will start applying from next year." Lawmaker Stefan Berger, who led negotiations on the law, stated in a press release that the EU is now "at the forefront of the token economy." He added, "The European crypto-asset industry has regulatory clarity that does not exist in countries like the U.S.

The sector that was damaged by the FTX collapse can regain trust."

Stablecoin Law to Take Effect in 2024, MiCA Rules in 2025

The law on stablecoins is expected to come into effect in July 2024, while broader rules for crypto service providers will become active starting in January 2025.

The crypto industry has been calling for greater oversight, and the EU's actions will certainly bring more stability to the market.

Industry Leaders Support the Move

In recent months, numerous industry leaders have warned that the crypto sector needs adequate oversight.

Changpeng Zhao, CEO of crypto exchange Binance, better known as CZ, recently tweeted his support for the EU's move. He explained that the new rules provide greater protection for users and support innovation in asset classes.

Brian Armstrong, CEO of crypto exchange Coinbase, has called on US authorities to enforce similar rules in the industry. He emphasized that if the situation remains unchanged, Coinbase could change its location, potentially leading to an exodus of companies and talent from the US.