MEPs approved rules for cryptocurrencies on Thursday, April 20, a first step at a time when several regulators around the world are trying to regulate this sector.
Since the emergence of the cryptocurrency market, each European country has gradually adopted its own regulations in this area. In France, for example, the use of cryptocurrencies is subject to the Pacte law of 2018. But without European harmonization, players in the sector had no difficulty in circumventing state laws.
The rules adopted by a large majority in the European Parliament, including the MiCA (Markets in Crypto-assets) regulation, are intended to combat illicit activities such as money laundering and terrorist financing and to protect consumers. ” With the MiCA regulation, the European crypto-asset industry has regulatory clarity that countries like the United States do not have. », praised the rapporteur Stefan Berger (EPP), considering that this brings « a competitive advantage to the EU “.
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MiCA, as well as the Transfer of Funds Regulations (TFR), also passed, “ mark the end of the Wild West of cryptocurrency, commented Ernest Urtasun (Greens), co-rapporteur of the Committee on Economic and Monetary Affairs on transfers of crypto-assets. The lack of regulation has resulted in massive losses for many early investors and served as a safe haven for hackers, fraudsters and international criminal networks for over a decade “, he underlined. According to Deutsche bank analysts, this clearer legal framework should allow new companies to use cryptocurrencies, increase trading volumes and therefore reduce price volatility, bitcoin rollercoaster prices and other cryptoassets driving away many investors.
Mandatory registration for service providers
Concretely, under the new European legislation, crypto-asset service providers (CASP) will now have to register and provide precise data on their identity if they wish to operate in the EU. The “Travel Rule”, already existing in traditional finance, will apply in the future to transfers of crypto-assets. It will oblige service providers in the field of crypto-assets to transmit certain information on customers and transactions to the financial institution receiving these transactions. In order to reduce the high carbon footprint of cryptocurrencies, larger service providers will additionally have to disclose their energy consumption.
These texts, which will have to be officially approved by the Council, aim to strengthen consumer protection and provide guarantees against market manipulation and financial crime.
Illicit transactions made with crypto-assets in 2022 more than doubled year-on-year to nearly $21 billion, despite a shrinking market, according to data platform Chainalysis. The setbacks of recent months, including the bankruptcies of banks and platforms like FTX, have shaken the world of cryptocurrencies and reignited the debate on the regulation of the sector. US regulators have launched an offensive against the practices of players in the sector, who blame Washington for opaque regulation in the absence of dedicated legislation. At the end of March, Binance was thus sued by the American regulator of financial derivatives.
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(With AFP)