On Monday, the European Parliament’s Committee on Economic and Monetary Affairs approved moving forward with a draft of the Markets in Crypto Assets law, or MiCA. After passing both chambers of the European Parliament, the European Council, and the European Commission, the measure will enter its final stages of negotiation. The policy establishing the crypto framework was approved by the ECON with a vote of 28 in favor to 1 against. Last week, the plan was approved by the European Council, which is made up of national representatives.
After the text has been translated into the EU’s more than 20 official languages, the last stage towards formal approval of the law is a vote in the full European Parliament. Because of the grace period included in MiCA, the new regulations could not go into force until the beginning of 2024. The MiCA text as of October 5 reads: To create a future-ready economy that serves the people, it is necessary to ensure that the European Union’s financial services law is suitable for the digital era and contributes to that economy, notably by facilitating the use of new technology. First presented in 2020, the MiCA legislation is intended to create an EU-wide legal framework for digital assets by 2025.
The unified European Union regulatory scheme will allow crypto companies to “passport” their services across member states. In addition, the plan provides a separate regulatory system for crypto assets and corresponding service providers who fall outside the purview of the existing EU financial services regime.
After an uproar from the cryptocurrency community, a section was removed from the original draft that would have explicitly outlawed proof-of-work-based cryptocurrencies like Bitcoin owing to energy usage concerns. Nearly two years have passed since the European Commission released the first EU legal framework for crypto assets as part of the larger policy agenda on digital finance.
What’s Next from European Parliament to Crypto Sector?
In addition, the MiCA will provide a “sandbox”-style experimental regime for crypto-related market infrastructures. Especially pertinent to the crypto business, the EU plan was defined as a sandbox in which startups and spinoffs from well-known companies may try out their products in real life. However, European authorities have yet to establish the boundaries of DeFi and their potential uses. Non-fungible tokens have been widely discussed in the media as of late. However, there is ambiguity around the regulation of this game-changing technology. There is no central government body with unambiguous regulatory sway over any given DApp, NFT, or sector at large.