EU Parliament New cryptocurrency – On Thursday, the European Parliament passed the first set of thorough regulations for the “Wild West” world of cryptocurrencies, with the goal of safeguarding investors from misuse and manipulation.
The legislation governing crypto assets, which include digital currencies like bitcoin and Ethereum as well as other tradable tokens whose value is protected by blockchain technology, including NFTs, has already received support from EU member states.
The regulations, which have already been endorsed by the vast majority of European legislators, aim to reform a sector that has been plagued by scandals and failures.
The FTX platform and its sister trading house Alameda Research went bankrupt in November, dissolving a virtual trading company that had a market value of $32 billion. This was one of the most recent cryptocurrency exchange disasters.
During a parliamentary discussion on Wednesday, Mairead McGuinness, the EU commissioner for financial services, stated that the regulations would have regulated FTX’s operations and maybe avoided its collapse at enormous expense to certain investors.
Markets in Crypto Assets (MiCA) regulations require crypto asset service providers (CASPs) to safeguard their clients’ digital wallets and hold them accountable if they misplace an investor’s crypto assets.
“We think that many of FTX’s practices would not have been permissible under MiCA, for example, had it been captured under EU jurisdiction,” McGuinness said in Strasbourg.
As part of the EU’s efforts to lessen cryptocurrencies’ high carbon impact, large providers will also be required to publish their energy usage.
A second regulation on fund transfers will increase monitoring of the trading of crypto assets and put it more in line with conventional financial norms.
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According to the EU, this will make it more difficult for criminals to utilize cryptocurrency for prohibited purposes like money laundering.
Ernest Urtasun, one of the EU MPs driving the measure through parliament, stated during the debate that the laws “mark the end of the Wild West era for the unregulated world of crypto assets.”
He continued, “For more than ten years, the lack of regulation has led to large losses for many first-time investors and given fraudsters and global criminal networks a safe haven.
Some have, however, criticized the draft legislation for not going far enough. – Creating a “safer environment”
“In line with the principle of proportionality, significant CASPs should be subject to both stricter requirements and enhanced supervision: neither of the two is catered for by MiCA,” wrote Elizabeth McCaul, a supervisory board member of the European Central Bank, in a blog post this month.
Additionally, it has been asserted that the regulation will stifle innovation, although McGuinness has refuted this notion.
We think that having a regulatory framework makes it possible for the sector to develop in a more unified and secure environment.
She continued by expressing her hope that other nations will adopt the guidelines as an example.
After being officially ratified into law by all EU member states, the regulations will gradually take effect starting in July 2024.
Later this year, the EU plans to present recommendations for a digital euro.