- 1 The approval of the controversial MiCA continues to move forward after the setback derived from the possible Bitcoin ban. The crypto community should appoint such a vote due to its significance.
The approval of the controversial MiCA continues to move forward after the setback derived from the possible Bitcoin ban. The crypto community should appoint such a vote due to its significance.
What is MiCA?
European Union to vote on MiCA legislation next week. Since the irruption of crypto assets in the world of finance and the growing concern of the European Union authorities about an investment in digital currencies, the leading financial institutions worldwide have warned about the danger of these assets. However, they are taking a step forward with the publication of the first draft regulation (“MiCA,” Markets in Crypto Assets) on what the European market for crypto assets should look like.
The European parliamentarian in charge of crypto-asset markets (MiCA), Stefan Berger, confirmed that next March 14, the European Parliament would vote on the legislation for a regulated cryptocurrency market in European territory.
Heute habe ich den finalen MiCA-Entwurf eingereicht. Der ECON-Ausschuss wird am 14. März 2022 hierüber abstimmen— Stefan Berger (@DrStefanBerger) March 7, 2022
➡️ Thread #MiCA
This resolution caused havoc in the crypto community because it would appear to be a vehicle for a “de facto” ban on Bitcoin due to its alleged high energy consumption through Proof-of-Work (PoW). Lawmakers postponed the final resolution until they withdrew such aggressive language towards Satoshi Nakamoto’s cryptocurrency. According to Berger, this vote still has great relevance.
Given the critical debate on sustainability, Berger proposes to include crypto assets, like all other financial products, in the scope of the taxonomy. They no longer foresee the separate thematization of Proof-of-Work in the MiCA.
The approval of the MiCA would be a big step in positioning Europe toward the crypto sector. Europe, until now, has always acted as an observer of what was happening in China or the United States. According to Berger, “strong support for MiCA is a strong signal from the EU Parliament in favor of a technology-neutral and innovation-friendly financial sector.“
Institutional investment in crypto might skyrocket
A vote in favor of MiCA would primarily affect three types of related services in the crypto sector:
- Crypto asset custody and management
- Cryptocurrency exchange platforms
- Advice, audits, or advertising of crypto products
First, the regulation would not apply to the underlying blockchain technologies of cryptocurrencies, nor would it apply to digital currencies issued by states and regulated by central banks. The rule applies to cryptocurrency tokens that are not considered financial instruments, such as utility and payment tokens.
However, decentralization comes at a price, meaning that crypto users have no recourse to the authorities in case of fraud, cyber-attack, or accidental loss of funds. The proposed EU regulation addresses this caveat to some extent, subjecting cryptocurrency exchange platforms (which the regulation calls “crypto-asset services“) to consumer protection, transparency, and governance rules.
The ultimate goal of MiCA is to provide a common regulatory framework for all EU member states. It will also be a standard licensing system by 2024. The procedure, the taxation of activities, and the reinforcement of anti-money laundering (AML) efforts are at stake. If approved, the measures would be complied with within the EU region and its most direct consumers, such as the United Kingdom and others.
Approval would serve as a groundbreaking crypto regulation regarding innovation, consumer protection, legal security, and the creation of reliable supervisory structures. These words delight institutional investors, precisely what they need to enter the crypto market with a firm footing.
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