Considering the recent FTX collapse that triggered higher volatility in the crypto market, the world’s jurisdictions are revamping their crypto regulation framework. The EU remains at the end of the race by delaying voting on its crypto regulations bill known as MiCA.
Notably, it was the second time the much-awaited bill, Markets in Crypto Regulations (MiCA), has been delayed. The parliament postponed the voting from November 2022 to February 2023 and now deferred it until April 2023. European legislators attributed translation issues as a reason behind both delays.
The proposed EU regulations consist of a 380-page document that must be translated into all 24 languages spoken on the continent. The crypto regulation was initially drafted in English and will be published in all languages to comply with comprehensive EU regulations. Moreover, it’s not only the MiCA vote getting late as the Transfer Funds Regulation (TFR); the crypto travel rule complemented to the MiCA will be voted in April 2023. TFR will make crypto platforms record their users’ identities and other data.
Understandably, postponing the final vote will practically increase the timeframe for implementing the MiCA rules. After the bill passes in April, the EU Authorities will take 12 to 18 months to design technical standards. The earliest these rules can become law is April 2024.
MiCA Regulations Reflect Comprehensive Approach
The ever-changing nature of blockchain technology pushed European Parliament and European Council to adopt MiCA regulations in June 2022. The EU agreed on MiCA regulations a day after Europe’s Parliament, Council, and EU Securities and Markets Authority (ESMA) finished preparing legal measures to prevent money laundering.
MiCA rules rely on a comprehensive regulatory approach to avoid discrimination in the crypto regulations on the EU level and set a standard. By providing a framework to design crypto laws, MiCA aims to bring legal certainty to digital currencies.
Alongside providing a separate licensing regime for crypto platforms, MiCA will preserve market integrity by tracking market manipulating attempts and regulating insider trading. Similarly, making crypto companies report financial information to watchdogs under the law is expected to decrease the chances of insolvency of crypto firms. Moreover, the MiCA covers the Know-Your-Customer (KYC) rule, structure and operation guidelines, governance of the issuer of a digital token, trading revenues, stablecoins, and wallets.
Interestingly, the Central Bank of France, one of the EU members waiting for MiCA regulations to come into effect, has called for an urgent need for a crypto licensing framework. During his speech, the institution pointed to the recent FTX bankruptcy and volatile market conditions. The bank wants the court to remove a legal clause allowing crypto companies to operate without acquiring Digital Assets Service Provider (DASP) license till 2026.