Crypto Licensing and Funds Transfer Rules Approved by EU Parliament

The European Union lawmakers overwhelmingly approved the introduction of a new crypto licensing framework, known as Markets in Crypto-Assets (MiCA), on Thursday with a vote of 517-38, and 18 absentions. This groundbreaking move marks the world's first comprehensive crypto law introduced by a major jurisdiction.

In addition to that, the Transfer of Funds regulation - a distinct legislation mandating crypto operators to verify the identities of their clientele with the aim of curbing money laundering - received overwhelming support from the European Parliament, with 529 in favor, 29 opposed, and 14 abstentions.

On Wednesday, legislators debated and mostly expressed their support for proposals that would require crypto wallet providers and exchanges to obtain licenses in order to operate throughout the bloc, as well as mandate that issuers of stablecoins linked to the value of other assets maintain adequate reserves. The vote that followed approved these measures.

Mairead McGuinness of the European Commission hailed the vote as a groundbreaking moment for cryptocurrency regulations, describing it as a "world first" in a tweet.

"We’re protecting consumers and safeguarding financial stability and market integrity," McGuinness said. "The rules will start applying from next year."

In a statement released by the European Parliament, Stefan Berger, the lawmaker who led negotiations on the law, said the rules put the EU "at the forefront of the token economy."

"The European crypto-asset industry has regulatory clarity that does not exist in countries like the U.S.," Berger said. "The sector that was damaged by the FTX collapse can regain trust."

The European Securities and Markets Authority also welcomed the vote in a tweet, and said it will "announce in due time" its timetable for drafting secondary legislation under MiCA. "ESMA still warns consumers that investing in cryptoassets is a risky endeavour with limited safeguards at this stage," the EU agency added.

In 2020, the European Commission initially proposed the regulation of Crypto Assets markets, which must receive approval from both the parliament and the EU's Council, representing the member states, to become law. The primary provisions of this regulation are set to take effect approximately 12 months after being published in the EU's official journal, expected to be in June.

Source Coidesk