Some rules are better than none
Europe is clearly taking crypto seriously, and moving faster than the U.S. The European Council approved the Markets in Crypto-Assets Regulation, or MiCA, last week; it could become law in 2024. The industry isn’t crazy about all the proposals, some of which rattled crypto leaders when they first came out early this year.
But there’s also a prevailing view that finally there’s some regulatory clarity in a key crypto market instead of the fuzzy regime of regulation by enforcement in the U.S.
“A dedicated and harmonized framework is necessary,” the European Council said in the proposal, which lays down rules on different aspects of crypto such as protecting consumers, cracking down on money-laundering, and making sure companies are accountable.
- Crypto providers will be required to register with EU authorities. They must publish a “crypto-asset white paper” disclosing key information on assets they’re selling, including the “underlying technology” and “related risks.”
- There will be strict guidelines for stablecoins, a clear reaction to the UST-luna collapse. These include strict capital requirements and rules for stablecoins not pegged to the euro and other EU currencies. Non-euro-linked stablecoins could face restrictions on transaction volume and value.
- The transaction restrictions could have “severe negative effects,” Blockchain for Europe and the Digital Euro Association said. The trade groups warned in an August statement that they “would expect to see extreme volatility and mass redemptions.”
- But the rules could also bolster the euro by encouraging euro-linked stablecoins. USDC issuer Circle just launched euro coin, a new stablecoin pegged to the euro.
Imperfect rules are better than none. Crypto is pushing back on key elements of the EU proposals as the European Parliament prepares for a vote on MiCA.
- Some crypto companies and leaders see MiCA as a positive development for an industry operating largely in the dark. The EU process offers “seemingly pragmatic and sensible regulation,” Bradley Duke, founder and co-CEO of ETC Group, said.
- It has also “helped dispel the myth that crypto and regulation are incompatible,” said Georgia Quinn, general counsel at Anchorage Digital.
- Yes, some aspects of MiCA are “contentious and controversial for the crypto community,” said Anto Paroian, executive director and CEO of ARK36, a crypto investment fund, but once it becomes law it will “likely speed up the adoption of cryptocurrencies by providing regulatory clarity and wide customer protections for users and investors” across the EU.