The European Union developed a draft regulation on the regulation of the cryptocurrency market, or MiCA, back in September 2020. Its main goal is to create a single legal field for the use of cryptocurrencies in the European Union. It will not duplicate the provisions of the AML legislation.
The authors of the project emphasize that the regulation should make the financial sector of the cryptocurrency market transparent at the legislative level. MiCA will protect investors and keep their money from scammers.
On 30 June 2022, the President of the Council and the European Parliament provisionally agreed on the provisions of the regulation.
Under the new rules, cryptocurrency service providers will be required to:
obtain a license to operate in the European Union;
comply with the requirements for protecting investors' wallets;
bear responsibility in case of loss of cryptocurrencies by the user;
publish reports and make them available to investors and the EU.
The European Council noted that it will not create separate rules for data protection when transferring cryptocurrencies. They will be governed by the EU General Data Protection Regulation.
Cryptocurrency providers will also have to declare information about the impact of their activities on the environment and climate. ESMA - European Securities and Markets Authority - will develop bills on major adverse environmental and climate impacts.
Then, within two years, the European Commission will have to provide a report on the impact of the cryptocurrency market on the environment and introduce minimum sustainability standards.
The European Banking Authority and the European Central Bank will be authorized to audit companies if they doubt the legality of their actions. Under MiCA rules, the European Bank will also be required to maintain a public register of cryptocurrency providers that do not comply with the law.
The MiCA law is expected to come into force at the end of 2023.
