The EU introduces new crypto rules to protect against fraud and climate impact
The MiCA law aims to reign in the 'wild west' of crypto assets.
Europe and its member states have provisionally agreed on new crypto regulations that aim to protect consumers and service providers, the European Parliament announced. Called "MiCA" (markets in crypto-assets), it's designed to guard against things like fraud, criminal activity, climate impact and more.
"In the Wild West of the crypto-world, MiCA will be a global standard setter," said Germany's MEP Stefan Berger in a statement. "MiCA will ensure a harmonised market, provide legal certainty for crypto-asset issuers, guarantee a level playing field for service providers and ensure high standards for consumer protection."
A new legal framework is designed to protect market integrating by regulating public crypto offerings. A key provision is a public register administered by the European Securities and Markets Authority (ESMA) to address money laundering concerns. Major crypto-asset service provider (CASPs) will also have to disclose energy consumption and declare environmental and climate impact data to their national authority, which will in turn inform ESMA.
This new regulation strengthens the European framework to fight money-laundering, reduces the risks of fraud and makes crypto-asset transactions more secure. The EU travel rule will ensure that CASPs can prevent and detect sanctioned addresses and that transfers of crypto-assets are fully traceable.
The law covers cryptocurrencies like Bitcoin and Ether, but NFTs (nonfungible tokens) including "cinema tickets, digital collectibles from clothing brands or in-game items in computer games" will be exempt. However, those could later be re-classified as financial instruments or crytpo assets subject to MiCA, according to the rules.
The law is still provisional, with key details like whether CASPs will need to be located in the EU still being debated, according to Bloomberg. Earlier version of the draft, first proposed in 2020, included a provision to ban Bitcoin and other cryptocurrencies that used energy-intensive mining processes. However, those were subsequently removed following industry complaints.
The news follows a a bad run for crypto, with the collapse of TerraUSD and other tokens, the freezing of withdrawals at Celsius and a general decline in the market. The US has yet to implement its own rules on crypto, but US senators recently introduced a bipartisan bill designed to do just that.