The popularity of crypto has risen to new heights over the last couple of years, especially in 2021. With their rise to fame and increased consumer adoption, cryptocurrencies have caught the attention of governments and financial watchdogs. Europe is no stranger to this. As the industry has reached the mainstream, the European Union is playing catch up to implement regulations. But what do these crypto regulations look like?
Crypto Regulation Europe; The MiCA
Step in, Markets in Crypto Assets (MiCA) legislation. What is it? The MiCA regulation was introduced in 2020 and provides a legal framework for crypto-asset markets within the EU. This aims to clearly define the regulatory treatment of crypto-assets that are not covered by existing financial services legislation. A clear-cut purpose of the MiCA is to streamline the launch process for crypto companies trying to break ground in more than one of the European Union’s 27 member nations. In short, a common license for crypto businesses that enables cross-border operations.
Sounds good, but why write an article about it now? Well…it seems to be moving ahead and a separate set of proposed rules too. The MiCA has reached the point where the European Parliament, the European Commission, and the European Council will discuss and agree on the legislation. In terms of the proposed rules, these have recently been voted on and may make using crypto a bit more difficult for companies and users. One question remains, the million Bitcoin one, when is all this expected to cross the finish line? As it stands, the goal is to have the MiCA regulatory framework wrapped up later this year. With the legislation coming to play for EU member states by 2024.
One thing is for sure, Bitcoin fans can rest easy and continue HODLing the most popular cryptocurrency. A proposal to limit proof-of-work mining in the EU won’t be part of the MiCA so on that front we’re all good.
Crypto Regulation Europe; There’s more…
What about these proposed rules? Simply put, these would make using crypto less invisible to authorities. For example, currently, recipients of bank transfers worth more than 1,000 euros have to be identified. The rules would ax the minimum limit for crypto transactions and require cryptocurrency exchanges to identify the recipients of crypto transfers.
If we’re going for more transparency, I think it goes without saying that tax havens like the Virgin Islands (both U.S. and U.K.), Turkey, Hong Kong, Iran, and others will be targeted by the proposed rules. Making it difficult for crypto exchanges to allow transactions to these tax havens.
On top of that, the EU also wants to implement anti-money laundering (AML) checks on private wallets. That would mean that wallet owners need to be identified. However, the crypto industry is fighting against these rules. Their argument; people would struggle to use private wallets and crypto exchanges would face and have to implement strict surveillance.
With crypto regulations on the horizon for European cryptocurrency users and businesses, the opportunity arises for RegTechs to step up to the plate and become the unspoken heroes of the industry. The European RegTech market has also experienced tremendous growth over the last years so let’s hope that these companies can help the crypto FinTechs navigate the regulatory waters.
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