Last Updated on May 16, 2023 by Bitfinsider
The Council of the European Union (EU), which is comprised of 27 member states, today overwhelmingly approved the Markets in Crypto Assets law (MiCA), making the EU the first significant region in the world to have a licensing system for cryptocurrencies. Additional anti-money laundering protections for bitcoin transfers were also agreed upon.
Finance ministers will soon formally ratify the new regulations. The tax authorities would be able to share data on public bitcoin ownership according to these proposed regulations.
By increasing transparency and creating a comprehensive framework for issuers and service providers, MiCA intends to protect investors. Compliance with anti-money laundering laws was among them. Issuers of utility tokens, asset-backed tokens, and stablecoins are subject to the new limitations.
It also includes service providers that house crypto-assets like trading platforms and wallets.
A uniform regulatory framework is created in the EU via the MiCA. This is a step up from the current situation, which is defined by national regulation in only a few member states and the worldwide nature of cryptocurrency marketplaces.
The “MiCA effect” has, according to Patrick Hansen, the EU Policy Director at USD Coin (USDC) stablecoin issuer Circle, increased VC investment in European crypto companies by nearly tenfold in a year. He provided an image from PitchBook showing that in Q2 2023, Europe received 48% of all venture capital funding for cryptocurrency businesses.
When the measure was approved by the European Parliament last month, Binance CEO Changpeng Zhao praised it on Twitter and said it would safeguard users and encourage innovation.
The new MICA framework offers regulatory clarity and consistency for crypto enterprises in the EU, according to Richard Teng, regional manager for Asia, Europe, and MENA at Binance. A benchmark that other regulators should follow, he feels.
The new MiCA regulations are attracting investors to European markets, although Crunchbase reported last month that VC funding for cryptocurrency businesses fell by 82% in the first quarter of 2023.
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