The European Central Bank (ECB) wants to harmonize regulations for crypto. It is concerned about the possible regulatory overlap between respective central banks in the EU and crypto companies. As such, the ECB is preparing to implement a new law – “Markets in Crypto Assets” or MiCA framework.
It should be noted that the European Parliament, European Council, and the European Commission reached an agreement on June 30 in an effort to bring crypto issuers and service providers within their jurisdiction control; under a single regulatory framework. A supervisory meeting has been scheduled to take place this month with regulators from 19 EU member states to attend. They will discuss MiCA and its implementation.
If the law comes into effect, asset service providers will have to adhere to certain requirements aimed at protecting investors. It also warns clients about the potential risks of investing in a volatile crypto market. Member officials have an 18-month review period to assess the proposed regulatory framework. They can see whether other crypto-related products like NFTs can be included in the regulatory framework.
The EU has ratcheted up efforts for crypto regulation after the Terra stablecoin crash, crypto market crash, and ongoing liquidation of crypto hedge funds. Keeping this in mind, policymakers have made dedicated guidelines to restrict the unregulated issuance and proliferation of stablecoins. Furthermore, it requires cryptocurrency issuers to publish a white paper, registers with concerned authorities, and maintain traditional bank-like reserves for stablecoins.
Through MiCA, the ECB wants to offer CSPs a passport to serve customers – obliging them to meet strong requirements to protect consumers’ wallets and become liable in case they lose investors.