EU Official Argues for MiCA Legislation
If you look at the collapse of FTX in 2022 and the recent $4.3-billion settlement by Binance with United States authorities, it makes a strong case for the European Union’s Markets in Crypto-Assets (MiCA) legislation, according to a European Commission official.
In an interview, the official stated that implementing the rule book set out by MiCA would mitigate risks and offer regulators more supervisory power to address those risks.
Objective and Scope of MiCA Regulations
MiCA aims to encourage innovation while addressing consumer risks, market integrity, financial stability, and monetary sovereignty. The regulations apply to issuers of crypto assets, crypto asset service providers, and aim to combat market abuse.
MiCA became effective in June 2023, and the rules governing certain tokens and service providers are expected to take effect in June and December 2024, respectively. Regulatory standards are being drafted to cover a wide range of considerations, with around 40 technical standards in the works.
Preparation Time and Grandfathering Clause
Cryptocurrency service providers have been given ample time to understand MiCA’s expectations during the consultation process. Additionally, a “grandfathering clause” allows service providers to continue operating under national rules for a period, but they cannot “passport” services across the EU.
Hot Take: Positive Implications of MiCA Legislation
It is evident that the MiCA legislation not only addresses the risks in the crypto space but also gives regulators more power to mitigate those risks, ultimately creating a more regulated and secure environment for crypto transactions and services.
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