The European Union (EU) passed a bill containing comprehensive regulations on the cryptocurrency industry for the first time in the world. The move is aimed at strengthening investor protection by reducing related risks by requiring at least one EU member country to operate a cryptocurrency business in Europe and placing it under the supervision of major European financial authorities such as the European Securities and Markets Administration (ESMA) and the European Bank Supervision Agency (EBA).
According to Bloomberg News, the European Parliament passed the cryptocurrency regulation package “MiCA” on the 20th (local time). Transparency in the cryptocurrency transaction process, supervision of related companies, and preventive measures against criminal activities were included. The bill will be approved by 27 EU member states and implemented gradually from July. However, the law is expected to take effect next year in consideration of the industry’s preparation period. “A new era has opened in the cryptocurrency market, which has been out of regulation for more than a decade, causing huge losses to numerous investors and being abused for crimes,” said Ernest Urtasun, a member of the European Parliament, Mika policymaker.
The new legislation has placed cryptocurrency providers responsible for the loss of cryptocurrency assets to reduce the risk of investors buying cryptocurrency. Cryptocurrency platforms should notify investors of the risks associated with operating the platform, and they should also secure sufficient reserves for stablecoins whose real currency and prices are linked in preparation for large withdrawals by investors. The daily trading volume of stable coins is limited to 200 million euros. European regulators have the authority to intervene directly if the cryptocurrency exchange does not properly protect investors or believes it harms financial stability.
The cryptocurrency industry also seems to welcome the first clear guidelines. Europe, one of the world’s largest markets, has introduced customized regulations for user protection and innovation, said Zhao Changfeng, CEO of Binance. “Details are important, but I think this bill will be a practical solution to the problems faced by cryptocurrency companies.”
This is the first time a bill has been created to comprehensively regulate the cryptocurrency industry. In the U.S., the largest cryptocurrency market, laws targeting virtual assets have not yet been prepared. Bloomberg said, “As the U.S. pushes for legislation targeting large companies such as Binance instead of regulating related industries, major cryptocurrency companies are rather strengthening their position in Europe.”