In a landmark decision on Thursday, the European Union (EU) Parliament passed the EU Markets in Crypto-Assets (MiCA) regulation, bringing the first-ever EU legislation for policing crypto assets one step closer to becoming law. The draft law was approved by a majority vote, with 529 votes in favour and 29 against.
The latest vote aimed to ensure that crypto transfers, like other financial operations, can always be traced and suspicious transactions blocked by introducing the so-called “travel rule.” The travel rule is a regulation by the Financial Action Task Force FATF that requires financial institutions to collect and share customer information during transactions to prevent money laundering and terrorist financing.
As per the draft law, the travel rule will cover transactions above €1000 from self-hosted wallets when interacting with crypto-assets service providers. However, the rules will not apply to transactions conducted between individuals without the involvement of a service provider.
The draft law also supports market integrity and financial stability by supporting measures against market manipulation, money laundering and terrorist financing.
The legislators also approved the European Securities and Markets Authority (ESMA) to establish a public register for unauthorized crypto service providers in the EU to tackle money laundering. Also, crypto service providers, including miners, will have to disclose their energy use to reduce the carbon footprint of crypto-currencies when the draft is enforced.
Following the latest vote, industry leaders have been outpouring their support, even as the US continues to employ brute force tactics against the crypto industry.
“While US regulators have been busy infighting and refusing to provide the most basic of clarity for the crypto industry, the European Union just approved the MiCA regulation, which provides a comprehensive regulatory framework for crypto in Europe. It’s sad to see the US being left behind on such an important technology and its promise,” Tyler Winklevoss, co-founder of crypto exchange Gemini, tweeted on Friday.
Susan Friedman, head of Ripple’s public policy, also commented that the US risks falling back due to its obsession with ‘Enforcement instead of clarity’.
“The EU has taken a big leap forward with a sensible, progressive approach to crypto regulation. We look forward to building and growing in the European marketplace,” she said.
Earlier this week, Coinbase CEO Ben Armstrong hinted at his exchange moving offshore, lauding the UK for “moving fast on sensible crypto regulation.” In an April 19 blog, Nana Murugesan, VP of International and Business Development noted that while they would like to see the US take an approach similar to that of the UK, “a regulation by enforcement approach in the US is instead leading to a disappointing trend for crypto development in the US.”
That said, the MiCA texts will now be forwarded to the council for formal endorsement before being published in the EU Official Journal, becoming effective after 20 days.