European Union Introduces MiCA Law to Regulate Crypto Assets

The MiCA law is gaining momentum in the European Union. This aims to regulate crypto assets for both consumers and service providers.

Europe and its member states have tentatively agreed on a new crypto asset law aimed at protecting consumers and service providers, as announced by the European Parliament. Called the MiCA, this law aims to protect against fraud, criminal activity, climate protection and more.

The MiCA law is penetrating the European Union

“In the Far West of the crypto world, MiCA will set the global standard,” MEP Stefan Berger said in a statement. “MiCA will provide a harmonized marketplace, provide legal certainty for crypto asset issuers, provide a level playing field for service providers, and ensure high standards of consumer protection.”

The new legal framework is intended to protect market integration by regulating public crypto offerings. Key provisions include a public registry maintained by the European Securities and Markets Authority (ESMA) to limit money laundering risks. Large crypto asset service providers (CAPs) will also be required to disclose their energy consumption and report environmental and climate impact data to their national authorities, who in turn will inform ESMA.

This new law strengthens the European anti-money laundering framework, reduces the risk of fraud, and makes transactions with crypto assets more secure. The law also ensures that CASPs can detect and prevent authorized addresses, as well as provide full traceability of the transfer of cryptoassets.

This aims to regulate crypto assets for both consumers and service providers.

The law applies to cryptocurrencies such as bitcoin and ether, but does not cover non-fungible tokens (NFTs), including “movie tickets, clothing brand collectibles, or in-game items in video games.”However, they may later be reclassified as financial instruments or crypto assets subject to MiCA, in accordance with the same law.

However, this law is currently still temporary. Important details, such as whether CASPs should be located in the European Union or not, are still being debated, according to Bloomberg. The previous version of this law, first proposed in 2020, included a clause to ban bitcoin and other cryptocurrencies that use energy-intensive mining processes. However, this one and others were taken down following complaints from industry representatives.

The news follows a difficult period for crypto, with the collapse of TerraUSD and other tokens, a Celsisus withdrawal freeze, and a general market downturn. The United States has yet to enact its similar cryptocurrency law, but US senators have recently proposed bipartisan legislation on the matter.