The 27-nation bloc now has the world’s most stringent set of Cryptocurrency regulations after member states gave their final approval to the comprehensive set of strengthened regulations on Tuesday.
The European Council approved the set of regulations known as the Markets in Crypto Assets (MiCA) as the final step in the bloc’s legislative procedure. The European Parliament had already approved the rules in April, and it is anticipated that they will start being implemented in stages, commencing in July 2024.
The increased European investigation comes in the wake of many high-profile cryptocurrency scams, such as the demise of trading platform FTX and the collapse of the TerraUSD stablecoin.
Improving transparency and Combat money laundering
The rules aim to improve transparency and combat money laundering and will cover stablecoins.Stablecoins typically tie themselves to a hard currency or a commodity like gold, reducing their volatility compared to regular cryptocurrencies.
Other digital tokens as well as bitcoin-related services such as trading platforms and digital wallets are also subject to the rules, but not bitcoin itself.
“Recent events have confirmed the urgent need for imposing rules which will better protect Europeans who have invested in these assets, and prevent the misuse of crypto industry for the purposes of money laundering and financing of terrorism,” said Swedish Finance Minister Elisabeth Svantesson, whose country holds the rotating presidency of the European Council.
Since 2020, crypto companies have been working under MiCA, which requires them to obtain approval to operate in the EU and holds them liable for the loss of investors’ assets.Authorities will compile a public list of “noncompliant” companies.
The rules, aimed at maintaining financial stability, include provisions to combat market manipulation and insider dealing. Companies issuing or trading crypto assets will have to disclose information on the risks, costs and charges that consumers face.
Major crypto companies will have to reveal how much energy they use. The massive amount of energy used in bitcoin mining to create new coins has stoked concern about crypto’s carbon footbprint.
The U.S. has made little progress in stepping up oversight of cryptocurrencies and digital assets, while the U.K. is considering feedback on proposed crypto regulations that it outlined last year.
Some European countries, like Germany, already have basic crypto regulations.