EU introduces licensing of crypto assets and anti-money laundering in new laws

The European Union voted 517 in favor and 38 against in favor of a new cryptocurrency licensing regime known as the Markets for Crypto Assets (MiCA). Another 18 people abstained, making the European Union the first major jurisdiction in the world to introduce a comprehensive cryptocurrency law.

The European Parliament also voted 529 in favor and 29 against in favor of a separate law known as the Funds Transfer Regulation, which would require cryptocurrency operators to identify their customers in an attempt to stop money laundering. Another 14 people abstained.

The vote followed debate in which lawmakers largely supported plans to require crypto wallet providers and exchanges to obtain a license to operate within the block, as well as require issuers of stablecoins pegged to the value of other assets to maintain sufficient reserves.

In a tweet, Maread McGinnis of the European Commission described the vote as “world’s first” rules for cryptocurrencies.

“We protect consumer interests and ensure financial stability and market integrity,” McGinnis said. “The rules will start to apply from next year.”

In a statement released by the European Parliament, Stefan Berger, the legislator who led negotiations on the law, said the rules put the EU “at the forefront of the token economy.”

“The European crypto asset industry has gained regulatory clarity that countries like the US don’t have,” Berger said. “A sector hit by the FTX crash could regain confidence.”

The European Securities and Markets Authority (ESMA) also welcomed the vote in a tweet and said it would “announce” a timetable for the drafting of MiCA secondary legislation in due course. “ESMA is still warning consumers that investing in crypto assets is a risky business with limited guarantees at this stage,” the EU agency added.

The regulation of cryptoasset markets was first proposed by the European Commission in 2020 and requires the approval of the Parliament and the Council of the EU, representing the member states of the bloc, to be passed into law. Its main provisions begin to apply just over 12 months after publication in the Official Journal of the EU, probably in June.

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