The European Union’s Markets in Crypto Assets Regulation (MiCA) a twenty seven (27) nation organization has resolved to offer a single, clear rulebook that would require crypto companies to register with the authorities, to hold sufficient capital to steady stablecoins and to offer clear and fair information to budding investors.
The new rules come at a brutal time for digital assets, with bitcoin facing its worst quarter in more than a decade.
The landmark law, known as Markets in Crypto-Assets, or MiCA, is designed to make life tougher for numerous players in the crypto market, including exchanges and issuers of so-called stablecoins, tokens that are meant to be pegged to existing assets like the U.S. dollar.
Under the new rules, stablecoins like tether and Circle’s USDC will be required to maintain ample reserves to meet redemption requests in the event of mass withdrawals. Stablecoins that become too large also face being limited to 200 million euros in transactions per day.
The European Securities and Markets Authority, or ESMA, will be given powers to step in to ban or restrict crypto platforms if they are seen to not properly protect investors, or threaten market integrity or financial stability.
“Today, we put order in the Wild West of crypto assets and set clear rules for a harmonized market that will provide legal certainty for crypto asset issuers, guarantee equal rights for service providers and ensure high standards for consumers and investors,” said Stefan Berger, the lawmaker who led negotiations on behalf of the European Parliament.
Last year, Kenya was ranked top globally in terms of peer to peer crypto trade, while Nigeria saw a meteoric rise in crypto use despite a ban. In Africa, the rapid adoption rates are being fueled by a young population that views virtual currencies as a safer counterbalance to their over-inflated fiat currencies.
But the old guard is not jumping on this bandwagon. The response from Africa’s governments has ranged from an indifferent “Wild West” absence of regulation to outright prohibitions that have proven ineffective in slowing trading.
Nowhere is this more apparent than Nigeria, whose central bank barred its financial institutions from enabling cryptocurrency transactions last year, joining 23 other African countries that have either implicit or total bans on trading (Africa accounts for more than half of countries that restrict the purchase of cryptocurrencies.) Crypto doesn’t needs banning in Africa. What it needs is Harmonised regulation to protect investors and regulate activities of crypto firm through license to deserving firm that meet set requirements.
Also Read: “Crypto Is Evil” : Binance New Campaign Calls For Global Regulation.
Non-fungible tokens (NFTs), which represent ownership in digital properties like art, were excluded from the proposals. The EU Commission has been tasked with determining whether NFTs require their own regime within 18 months.
Separately, regulators also agreed on measures Wednesday that would reduce anonymity when it comes to certain crypto transactions. Authorities are deeply concerned about exploitation of crypto-assets for laundering ill-gotten gains and evasion of sanctions — particularly after Russia’s ongoing invasion of Ukraine.
Transfers between exchanges and so-called “un-hosted wallets” owned by individuals will need to be reported if the amount tops the 1,000-euro threshold, a contentious issue for crypto enthusiasts who often trade digital currencies for privacy reasons.
The rules are expected to come into force as early as 2024, a landmark move that would put the bloc ahead of both the U.S. and Britain in rolling out laws tailored to the crypto market.
“Harmonization of the market is key in order to really generate bigger crypto companies in Europe,” said Patrick Hansen, an advisor at the venture fund Presight Capital.
“Europe is lacking huge crypto companies right now, and fragmentation is one of the reasons why.”
Discover more from DiutoCoinNews
Subscribe to get the latest posts sent to your email.
