Regulating the crypto market might seem like a herculean task, but the EU is well on its way to deciding the text of its major Crypto law. This historic law is one of the first major efforts by a collective of countries looking to regulate cryptocurrencies.
While the idea for this monumental bill did start floating around in early July, the law did not start to take shape. The country’s bloc dedicated to drafting the bill has finally settled on its text, which will address major concerns that individuals had about the crypto market. More specifically, the best thing about the new law is that it would finally hold many crypto firms accountable.
Accountability was a major concern for many people, as the anonymity of everyone using the service meant that fraud was rampant. And companies that would start up with promises to do amazing things would eventually settle and go bust in a matter of weeks or months.
The First Licensing Regime Dedicated to Crypto
The MiCA will be the first law dedicated to licensing and regulating various crypto firms. If cryptocurrencies want to operate in any country throughout the EU, they will have to follow the legal text that the bloc has signed off on.
Although most of the details have yet to be finalized, one of the major requirements that they are bringing is that the stablecoins will need to meet a reserved quota before they can receive their license. Following the catastrophic collapse of Terra, one of the largest stablecoins in the market, the bloc adding this requirement shows that they are in touch with the market.
This clause will essentially make sure that all investors are reimbursed if the company fails or shuts down.
Checking Customer Identity
Although the bloc responsible for the MiCA is not responsible for this law, they are working with the team that is. The new law will mandate that crypto exchanges go through the necessary motions to check the identity of their users.
Easily the most controversial law regarding cryptocurrencies, it is trying to cut out money laundering from the market entirely. Since cryptocurrencies have always had to deal with the bad reputation that comes with money laundering throughout the market. By taking a step to mitigate money laundering, however, it is very likely that the community might be opposed to the idea since it infringes on the freedom of anonymity.
Still a Long Time Before Taking Effect
While MiCA remains one of the most progressive laws to regulate cryptocurrencies, it still has a long time until it comes into effect. Most likely, EU lawmakers estimate that the law will come into effect by 2024.