EU introduces new laws to regulate cryptocurrency companies
Globally, the cryptocurrency market is mostly unregulated. This means that most companies are only required to follow rules for anti-money laundering purposes. However, the EU has announced that it plans to introduce new rules to regulate cryptocurrency in Europe.
The new legislation is called the Markets in Crypto-assets (MiCA) law and was agreed upon by representatives from the European Parliament and EU states
Under this new law, in order to sell digital currencies, companies will need a license and will be given more responsibilities, including following certain rules to safeguard customers.
It’s currently predicted that NFTs will be excluded from these laws “except if they fall under existing crypto-asset categories”, but this will be reassessed in 18 months.
Protecting cryptocurrency customers
Advocates for the new law have described the crypto markets as a “Wild West”, with no clear rules and highly risky, volatile trading conditions that leave investors vulnerable.
The markets tumbled this year leading several trading platforms to freeze withdrawals and transfers. The biggest token, bitcoin, fell 70% since its record high in November.
The EU’s landmark regulation sets new standards for crypto providers. Companies will need a “passport” to serve clients across the EU. They will also need to follow new regulations to protect their customers and they will be liable if they lose investors’ crypto-assets.
Before becoming law, it will need to be approved by the European Parliament and EU states to become law, followed by an implementation period.
After the collapse of the terraUSD stablecoin earlier this year, holders of stablecoins – which are designed to hold a steady value – will be supervised by the bloc’s banking watchdog.
According to AFME, a financial markets industry body, the new rules will provide more stability and help to strengthen the cryptocurrency market. However, it noted that more clarity is needed in cases of events outside of the company’s control.