The European Parliament has taken a significant step towards regulating the crypto-asset market with the approval of the first-ever EU legislation for tracking crypto-asset transfers. The new legislation aims to deter money laundering and establish standard supervision and consumer protection guidelines. Under the new rules, crypto transfers will now be subject to the “travel rule,” which is already applicable in traditional finance. This rule mandates that transaction information, including the source and recipient of the asset, be documented and stored on both ends of the transfer.
Transactions over €1000 involving self-hosted wallets when interacting with hosted wallets overseen by crypto-asset service providers will be subject to this regulation. However, the new rules will not apply to transfers between individuals without a provider or among providers acting independently.
The MiCA framework, approved by the Parliament in June 2022, will cover crypto-assets that are not currently regulated by existing financial services laws. The key provisions of the framework target transparency, disclosure, authorization, and supervision of transactions for those issuing and trading crypto-assets. The aim is to provide better information to consumers about potential risks, costs, and charges associated with their transactions. The new legal framework is also designed to enhance market integrity and financial stability by regulating public offers of crypto-assets.
The legislation includes specific measures to combat money laundering and other illicit or criminal activities. The European Securities and Markets Authority (ESMA) will be responsible for creating a public register of non-compliant crypto-asset service providers operating within the EU without proper authorization. Additionally, major service providers must disclose their energy consumption to address the “high carbon footprint” of cryptocurrencies. The EU's approach to regulating the crypto-asset market is expected to set a model for other jurisdictions around the world. According to Stefan Berger, the lead MEP for the MiCA regulation, this legislation places the EU at the forefront of the token economy, providing regulatory clarity for the European crypto-asset industry. Co-rapporteurs Ernest Urtasun and Assita Kanko also emphasized the significance of this legislation in addressing loopholes in the EU’s AML framework and unifying the fragmented European market.
The legislation will now proceed to the Council for formal endorsement before being published in the EU Official Journal and entering into force 20 days later. Once implemented, the new regulations will lead to increased transparency and accountability in the crypto industry, while also providing more protection for consumers and deterring financial crimes.
Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.