The MiCA licensing scheme is expected to become official in early 2025. The European Union’s Parliament has given its official approval to the Market in Cryptoassets (MiCA), a legal framework that could set clear industry standards. The clearance comes about five months after the historic FTX debacle and is intended to protect investors from such failures.
‘Stringent Rules are Very Much Needed’
The EU Parliament approved the new cryptocurrency licencing regulation – MiCA – by a vote of 517 to 38. It also endorsed a separate rule mandating digital asset operators to identify their clients when transferring monies in order to avoid money laundering.
The so-called “travel rule,” which has been employed in traditional finance, will apply to cryptocurrency transactions, informing customers about the source of the assets and the beneficiary. It will also apply to transfers from crypto wallet addresses to private users worth more than €1,000 (about $1,100). It does not apply to person-to-person interactions.
The European Commissioner for Financial Stability, Financial Services, and the Capital Markets Union, Mairead McGuinness, commended the MiCA legislation as the world’s “first comprehensive crypto rules.” She believes such guidelines are critical in light of the numerous crashes and scandals that shut down the sector last year: The legislation on stablecoins is planned to go into effect in July 2024, while the larger rules on crypto providers are expected to go into effect in January 2025.
CZ Praises the New Rules
Several industry experts have warned in recent months that effective management of the Bitcoin business is essential. Changpeng Zhao, CEO of Binance, often known as CZ, hailed the EU’s move in a recent tweet, stating that it provides more consumer protection and promotes asset-class innovation.
The European Parliament voted to introduce MiCA. This means that one of the world’s largest markets is enacting crypto-specific legislation to safeguard users and foster innovation.