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The trilogy of the European Union Council, Parliament, and Commission have finally agreed on the comprehensive Markets in Crypto Assets (MiCA) framework.
The agreement has paved the way for a comprehensive regulatory framework for the nascent crypto ecosystem, making it the first of its kind in the world.
MiCA embodies and addresses quite a number of grey areas with respect to the regulations in the digital currency ecosystem. Of the earlier agreements reached was that Proof-of-Work (PoW) mining, a consensus under which Bitcoin (BTC) and some altcoins adopt will not be banned.
“MiCA Trilogue: Breakthrough! Europe is the first continent with crypto asset regulation. Parliament, Commission & Council have agreed on balanced #MiCA . For me as reporter it was important that there is no ban on technologies like #PoW,” Stefan Berger, a member of the European Parliament and rapporteur on the regulatory affairs concerning MiCA said in a tweet. “We have a technology-open approach: #Krypto asset providers should in future disclose the energy consumption and the impact of assets on the environment. The basis for this will be Regulatory Technical Standards (#RTS ).”
MiCA Trilog: Durchbruch! Europa ist der erste Kontinent mit einer Krypto-Asset Regulierung. Parlament, Kommission & Rat haben sich auf ausgewogene #MiCA geeinigt. Für mich als Berichterstatter war wichtig, dass es hier keine Verbannung von Technologien wie #PoW gibt /1
— Stefan Berger (@DrStefanBerger) June 30, 2022
There have been a lot of media reports on the probable timeline in which EU leaders will reach an agreement with respect to the crypto assets regulatory framework. As duly noted, the fasttrack had something to do with the fact that the French presidency of the European Council ended on June 30th, and efficiency demands that this regulation which has been under deliberation become concluded.
The exact details of the finalized crypto regulation have not yet been made public, and it is worth noting that the implementation of the provisions of the regulation across all the relevant EU agencies is bound to take quite some time.
Provisions for Investor Protections in European Union MiCA Bill
The primary focus of MiCA provision is to ensure that investors are adequately protected across the board. Ernest Urtasun, a member of the European Parliament explained that accountability will now be demanded from Crypto Asset Service Providers (CASPs), particularly those that issue stablecoins.
“Agreement between the EU institutions on MiCA: we will have a common harmonized EU-wide regime for crypto-asset issuers and service providers, that will provide security for investors and support sustainability, while to reducing fragmentation and increasing legal clarity,” Urtasun said in a long Twitter thread. “MiCA provide safeguards against cases like the crypto-crash, the collapse of the stablecoin LunaUSD.”
Urtasun explained that “Large stablecoins will be subject to strict operational and prudential rules, with restrictions if they are used widely as a means of payment, and a cap of 200€millions in transactions/day.”
3/13 Large stablecoins will be subject to strict operational and prudential rules, with restrictions if they are used widely as a means of payment, and a cap of 200€millions in transactions/day.
— Ernest Urtasun (@ernesturtasun) June 30, 2022
The cap placed on transactions involving stablecoins has been considered by many to be a major bottleneck that makes MiCA dead on arrival seeing the two largest stablecoins, USDT and USDC process over $50 billion in a single day.