Release by the EU Council
30 June 2022, 22:30
The EU brings crypto-assets, crypto-assets issuers and crypto-asset service providers under a regulatory framework for the first time.
The Council presidency and the European Parliament reached a provisional agreement on the markets in crypto-assets (MiCA) proposal which covers issuers of unbacked crypto-assets, and so-called “stablecoins”, as well as the trading venues and the wallets where crypto-assets are held. This regulatory framework will protect investors and preserve financial stability, while allowing innovation and fostering the attractiveness of the crypto-asset sector. This will bring more clarity in the European Union, as some member states already have national legislation for crypto-assets, but so far there had been no specific regulatory framework at EU level.
Recent developments on this quickly evolving sector have confirmed the urgent need for an EU-wide regulation. MiCA will better protect Europeans who have invested in these assets, and prevent the misuse of crypto-assets, while being innovation-friendly to maintain the EU’s attractiveness. This landmark regulation will put an end to the crypto wild west and confirms the EU’s role as a standard-setter for digital topics.
Bruno Le Maire, French Minister for the Economy, Finance and Industrial and Digital Sovereignty
Regulating the risks related to crypto-assets
MiCA will protect consumers against some of the risks associated with the investment in crypto-assets, and help them avoid fraudulent schemes. Currently, consumers have very limited rights to protection or redress, especially if the transactions take place outside the EU. With the new rules, crypto-asset service providers will have to respect strong requirements to protect consumers wallets and become liable in case they lose investors’ crypto-assets. MiCA will also cover any type of market abuse related to any type of transaction or service, notably for market manipulation and insider dealing.
Actors in the crypto-assets market will be required to declare information on their environmental and climate footprint. The European Securities and Markets Authority (ESMA) will develop draft regulatory technical standards on the content, methodologies and presentation of information related to principal adverse environmental and climate-related impact. Within two years, the European Commission will have to provide a report on the environmental impact of crypto-assets and the introduction of mandatory minimum sustainability standards for consensus mechanisms, including the proof-of-work.
To avoid any overlaps with updated legislation on anti-money laundering (AML), which will now also cover crypto-assets, MiCA does not duplicate the anti-money laundering provisions as set out in the newly updated transfer of funds rules agreed on 29 June. However, MiCA requires that the European Banking Authority (EBA) will be tasked with maintaining a public register of non-compliant crypto-asset service providers. Crypto-asset service providers, whose parent company is located in countries listed on the EU list of third countries considered at high risk for anti-money laundering activities, as well as on the EU list of non-cooperative jurisdictions for tax purposes, will be required to implement enhanced checks in line with the EU AML framework. Tougher requirements may also be applied to shareholders and to the management of the CASPs), notably with regard to their localisation.
A strong framework applicable to so-called “stablecoins” to protect consumers
Recent events on the so-called “stablecoins” markets showed once again the risks incurred by holders in the absence of regulation, as well as the impacts it has on other crypto-assets.
In fact, MiCA will protect consumers by requesting stablecoins issuers to build up a sufficiently liquid reserve, with a 1/1 ratio and partly in the form of deposits. Every so-called “stablecoin” holder will be offered a claim at any time and free of charge by the issuer, and the rules governing the operation of the reserve will also provide for an adequate minimum liquidity. Furthermore, all so-called “stablecoins” will be supervised by the European Banking Authority (EBA), with a presence of the issuer in the EU being a precondition for any issuance.
The development of asset-referenced tokens (ARTs) based on a non-European currency, as a widely used means of payment, will be constrained to preserve our monetary sovereignty. Issuers of ARTs will need to have a registered office in the EU to ensure the proper supervision and monitoring of offers to the public of asset-referenced tokens.
This framework will provide the expected legal certainty and allow innovation to flourish in the European Union.
EU-wide rules for crypto-asset service providers and different crypto assets
Under the provisional agreement reached today, crypto-asset service providers (CASPs) will need an authorisation in order to operate within the EU. National authorities will be required to issue authorisations within a timeframe of three months. Regarding the largest CASPs, national authorities will transmit relevant information regularly to the European Securities and Markets Authority (ESMA).
Non-fungible tokens (NFTs), i. e. digital assets representing real objects like art, music and videos, will be excluded from the scope except if they fall under existing crypto-asset categories. Within 18 months the European Commission will be tasked to prepare a comprehensive assessment and, if deemed necessary, a specific, proportionate and horizontal legislative proposal to create a regime for NFTs and address the emerging risks of such new market.
Next steps
The provisional agreement is subject to approval by the Council and the European Parliament before going through the formal adoption procedure.
Background
The European Commission came forward with the MiCA proposal on 24 September 2020. It is part of the larger digital finance package, which aims to develop a European approach that fosters technological development and ensures financial stability and consumer protection. In addition to the MiCA proposal, the package contains a digital finance strategy, a Digital Operational Resilience Act (DORA) – that will cover CASPs as well – and a proposal on distributed ledger technology (DLT) pilot regime for wholesale uses.
This package bridges a gap in existing EU legislation by ensuring that the current legal framework does not pose obstacles to the use of new digital financial instruments and, at the same time, ensures that such new technologies and products fall within the scope of financial regulation and operational risk management arrangements of firms active in the EU. Thus, the package aims to support innovation and the uptake of new financial technologies while providing for an appropriate level of consumer and investor protection.
The Council adopted its negotiating mandate on MiCA on 24 November 2021. Trilogues between the co-legislators started on 31 March 2022 and ended in the provisional agreement reached today.
- Anti-money laundering: Provisional agreement reached on transparency of crypto asset transfers (press release, 29 June 2022)
- Digital finance package: Council reaches agreement on MiCA and DORA (press release, 24 November 2021)
- Commission proposal for a Regulation on Markets in Crypto-assets
- Digital finance (background information)
EU Parliament: Cryptocurrencies in the EU – deal struck between Parliament and Council
- Uniform legal framework for crypto-assets in the EU
- Consumer protection and safeguards against market manipulation and financial crime
- Significant crypto-assets service providers (CASPs) to disclose their energy consumption
The new rules will introduce provisions on supervision, consumer protection and environmental safeguards for crypto-assets, including cryptocurrencies.
On Thursday evening, the Economic and Monetary Affairs Committee negotiators struck a provisional political agreement with the Council on new rules on crypto-assets (MiCA).
Key provisions agreed by negotiators for those issuing and trading crypto-assets (including asset-reference tokens and e-money tokens) cover transparency, disclosure, authorisation and supervision of transactions. Consumers would be better informed about risks, costs and charges. In addition, the new legal framework will support market integrity and financial stability by regulating public offers of crypto-assets. Finally, the agreed text includes measures against market manipulation and preventing money laundering, terrorist financing and other criminal activities.
Scope and anti-money laundering provisions
Negotiators decided that MiCA will cover crypto-assets that are not regulated by the existing financial services legislation. ESMA will be tasked with providing guidelines in this respect.
To counter money-laundering risks the European Securities and Markets Authority (ESMA) should set up a public register for non-compliant CASPs that provide services in the European Union without authorization.
Non-Fungible Tokens (NFT) are unique and unlike cryptocurrencies they are not traded or exchanged at equivalency. All sorts of NFTs offered to the public at a fixed price, such as cinema tickets, digital collectibles from clothing brands or in-game items in computer games will be exempt from the scope of MiCA. However, dependant of their development the rules envisage a re-classification of NFTs either as a financial instrument or as a crypto asset subject to MiCA.
Environmental safeguards
To reduce the high carbon footprint of crypto-currencies, particularly of the mechanisms used to validate transactions, significant CASPs will have to disclose their energy consumption. ESMA should prepare regulatory technical standards on these obligations to provide the market with clear guidance on how such disclosures should be carried out. CASPs should make publicly available, in a prominent place on their website, information on their environmental and climate impact and forward this information to their national competent authority, which will inform ESMA.
Quote
Stefan Berger (EPP, DE), the lead MEP, said: “MiCA is a European success. We are the first continent to have a crypto-asset regulation. In the Wild West of the crypto-world, MiCA will be a global standard setter. MiCA will ensure a harmonised market, provide legal certainty for crypto-asset issuers, guarantee a level playing field for service providers and ensure high standards for costumer protection. Tokenisation will be as ground breaking for the financial world as the introduction of the joint market was in the 17th century. With the MiCA regulation, reliable authorisation and supervisory structures for new tokens are now being created for the first time.”
Next steps
The provisional political agreement reached by the EP negotiating team will now have to be approved first by the Economic and Monetary Affairs Committee, followed by a plenary vote. The Council also has to approve the deal, before it can come into force.
EU-Abgeordneter Berger (CDU) zur MiCA-Trilog-Einigung MiCA und Krypto-Währungen
Zur Trilog-Einigung zur “Markets in Crypto Assets”-Verordnung (MiCA) erklärt Stefan Berger (CDU), Mitglied im Ausschuss für Wirtschaft und Währung und Berichterstatter des Europaparlaments:
„Als erster Kontinent der Erde führt Europa nun eine Krypto-Regulierung ein. Im globalen Kryptomarkt herrscht bislang der wilde Westen. Mit der Markets in Crypto-Assets Regulierung wird Europa weltweit zum Standardsetzer.
Die Tokenisierung wird für die Finanzwelt so bahnbrechend sein wie die Einführung der Aktiengesellschaft im 17. Jahrhundert. Mit der MiCA-Verordnung werden jetzt erstmals verlässliche Zulassungs- und Aufsichtsstrukturen für neue Token geschaffen. Damit bringen wir Ordnung in die Krypto-Landschaft, sorgen für Verbraucherschutz und fördern Krypto-Innovationen.
Für mich als Berichterstatter war stets klar, dass MiCA nicht die Geburtsurkunde eines europäischen Proof-of-Work-Verbotes sein darf. Nachhaltigkeit muss auch ohne Technologie-Verbannung gehen. Es ist gut, dass Parlament, Kommission und Rat gemeinsam den Weg der Technologieoffenheit eingeschlagen haben. Wir haben uns darauf geeinigt, dass Crypto-Asset Anbieter künftig den Energieverbrauch und die Auswirkungen von Assets auf die Umwelt offenlegen sollen. Grundlage dafür werden Regulatory Technical Standards (RTS) sein.“
Hintergrund:
Heute Abend haben sich die Unterhändler von Europaparlament und Rat im sog. Trilog auf einen Gesetzestext zur Markets in Crypto-Assets Verordnung (MiCA) geeinigt. Den Trilog-Verhandlungen gingen Diskussionen rund um den Energieverbrauch des Bitcoins und eines de-facto Verbots von Proof-of-Work voraus. Die Einigung sieht vor, dass Crypto-Asset Anbieter künftig Energieverbrauch und Umweltauswirkungen offenlegen müssen.
Quelle – CDU (per e-Mail)
Renew Europe on MiCA: Deal ensures an innovative and future proof regulation for crypto assets in Europe
JUNE 30, 2022
The Renew Europe Group in the European Parliament welcomes today’s interinstitutional agreement on Markets in Crypto-assets (MiCA) Regulation, which aims to introduce for the first time a sound legal framework for crypto-asset markets to develop within the EU, by clearly defining the regulatory treatment of crypto-assets that are not covered by existing financial services legislation.
Renew Europe advocated for a final compromise that foresees a harmonised approach that is proportional, flexible (to allow innovation) and future-proof, while also improving financial stability, fair competition, consumer and investor protection and addressing sustainability concerns. In addition, our MEPs have worked hard to make this regulation compatible with the upcoming anti-money laundering package.
MEP Ondřej Kovařík (ANO, Czechia), Renew Europe’s shadow rapporteur on this file, said:
“The EU has agreed to a landmark deal on the MiCA Regulation. This marks the first steps to framing crypto markets in Europe, with the objective of giving certainty to investors, and a predictable framework for crypto firms operating within the EU Single Market”
Likewise, our political Group embraces the interinstitutional agreement on the revised transfer of funds regulation (EU 2015/847). The endorsed text will reinforce Union policy on preventing money laundering and terrorism financing by ensuring crypto-asset transfers (out of the EU scope so far) have the same requirements as for cross-border wire transfers, so as to secure adequate oversight, and to clearly identify both providers and beneficiaries. In the context of the unfolding crisis in Ukraine, this regulation might be key to prevent Russians linked to Putin’s regime from circumventing EU sanctions.
Kovařík declared:
“EU institutions found a provisional political agreement on the Transfer of Funds Regulation. I believe it strikes the right balance in mitigating risks for fighting money laundering in the crypto sector without preventing innovation and overburdening businesses”
Renew Europe has been a leading voice in the European debate on crypto since it held the rapporteurship for the Digital Finance Report, adopted by the European Parliament in 2020, and has consistently called for a strong regulatory framework for crypto-assets, in order to ensure the EU is prepared for structural digital transformations.
Source – Renew Europe (via e-mail)