Considering the recent collapse of FTX which has led to higher volatility in the crypto market, world jurisdictions are revising their crypto regulatory framework. The EU remains at the end of the race by postponing the vote on the crypto regulation bill known as MiCA.
Notably, this is the second time the long-awaited bill, Markets in Crypto Regulations (MiCA), has been delayed. Parliament postponed the vote from November 2022 to February 2023 and now postpones it until April 2023. European parliamentarians consider translation problems as the reason for the postponement.
The proposed EU regulation includes a 380-page document that must be translated into all 24 languages spoken on the continent. The crypto regulation was originally drafted in English and will be published in all languages to comply with comprehensive EU regulations. In addition, it is not only MiCA’s late vote that is the Transfer of Funds Regulation (TFR); crypto travel rules equipped with MiCA will be selected in April 2023. TFR will create a crypto platform recording user identity and other data.
Of course, postponing the final vote will increase the time it takes to implement the MiCA rules. After the bill is passed in April, EU authorities will take 12 to 18 months to draft technical standards. The earliest this rule could become law is April 2024.
The MiCA Regulations reflect a Comprehensive Approach
The ever-changing nature of blockchain technology pushed the European Parliament and the European Council to adopt the MiCA regulation in June 2022. The EU agreed to the MiCA regulation one day after the Parliament, the Council, and the European Union’s Securities and Markets Authority (ESMA) finished preparing the measures laws to prevent money laundering.
MiCA rules rely on a comprehensive regulatory approach to avoid discrimination in crypto regulation at the EU level and set standards. By providing a framework for drafting crypto legislation, MiCA aims to bring legal certainty to digital currencies.
In addition to providing a separate licensing regime for crypto platforms, MiCA will maintain market integrity by tracking market manipulation attempts and regulating insider trading. In addition, making crypto companies report financial information to the watchdog under the law will reduce the likelihood of crypto company insolvency. In addition, MiCA covers Know-Your-Customer (KYC) rules, structure and operation guidelines, governance of digital token issuers, trading revenues, stablecoins, and wallets.
Interestingly, the Central Bank of France, one of the EU members waiting for the MiCA regulation to come into effect, has called for an urgent need for a crypto licensing framework. During the speech, the institution pointed to the recent bankruptcy of FTX and the volatile market conditions. The bank wants the court to remove a legal clause that allows crypto companies to operate without obtaining a Digital Asset Service Provider (DASP) license until 2026.
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