The legal texts of the highly anticipated MiCA legislation have finally been agreed upon by the European Union (EU). MiCA, which is an abbreviation for Markets in Crypto Assets Regulation, has been in the works for a while now. The legislation is aimed at creating a regulatory framework for the crypto industry within the EU. But the initial provisions of MiCA had raised concerns that it may stifle innovation. So, many onlookers are keen on seeing if those earlier provisions will be revised or not.
Now, however, diplomats representing the blocs of the EU’s council have finally agreed on the text contained in the legislation. The EU also agreed to a fund transfer law seeking to reveal the identity of anyone making a crypto payment.
MiCA Legislation to Focus on Investor Protection
Meanwhile, the regulatory framework that the EU is keen on building, revolves around its interests in investor protection. Especially since the Terra collapse, global regulators have had to keep an eye on stablecoins by imposing strict reserve requirements on them.
Similarly, as the EU hopes to curb money laundering in the region, a separate law on fund transfers is also being considered. This law, if passed, will ensure that customers reveal their identity as a requirement to carry out crypto payments.
Regulatory Clarity Still an Issue
For what it’s worth though, the crypto industry may be taking a cautious approach to the MiCA regulation for now. Some believe that the regulation is too strict and would hinder an innovative technology like the one behind crypto. Others, however, believe that MiCA could potentially limit the trading of U.S. dollar-denominated stablecoins within the EU.
In any case, there have been several calls for an amendment and clarity regarding the legislation. But it appears the EU is not budging as it hopes to keep the sovereign role of the euro.
Despite today’s agreement though, the text is still subject to the agreement of lawmakers at the European Parliament.