- MiCA has passed another milestone.
- The EU Council has adopted new tax rules for the nascent market.
- MiCA promises clarity for crypto businesses.
Cryptocurrency regulations have become a hot topic in recent years as various jurisdictions debate how the emerging market should be regulated or whether it should be regulated at all.
In this process, some jurisdictions are far ahead of others. One such region is Europe, whose parliament passed the Markets in Crypto-Assets (MiCA) bill in April after nearly three years of development. The bill has now cleared a vote by the EU Council.
MiCA a Step Closer to Becoming Law, Tax Rules Target the Rich
The EU Council, representing the finance ministers of the 27-member bloc, unanimously approved the MiCA in a vote on Tuesday, May 16.
The vote represents the regulatory framework’s last hurdle and takes it another step closer to becoming law.
"I am very pleased that today we are delivering on our promise to start regulating the crypto-assets sector. Recent events have confirmed the urgent need for imposing rules which will better protect Europeans who have invested in these assets, and prevent the misuse of crypto industry for the purposes of money laundering and financing of terrorism," Minister for Finance of Sweden Elisabeth Svantesson noted.
Aside from adopting MiCA, the Council also reached an agreement on crypto tax rules that would facilitate information sharing within the bloc.
The Directive on Administrative Cooperation (DAC8) tax regulations would require crypto service providers to report customers’ holdings as the bloc plans to curb tax evasion. According to the Council, the rules mainly target the “wealthiest (high-net-worth) individuals.”
As MiCA edges closer to becoming law, Europe is also edging closer to becoming a model for other regions, according to Chief Executive Officer of YouHolder Ilya Volkov, who highlighted the potential benefits of the new rule in a recent statement. YouHolder is a Web3 platform based in Switzerland.
What Are the Benefits of MiCA Regulation?
MiCA is unique as it offers crypto regulations for only one country but 27. Volkov argued that MiCA’s implementation will “fill the gap between the tech progress and formal rules at the state levels.”
The YouHolder chief further asserted that the regulations could see greater inclusion of crypto technology in financial services.
While MiCA is not without its flaws, for many crypto businesses currently battling regulatory uncertainty in jurisdictions like the United States, the clarity on becoming compliant is a welcome development. Binance Chief Changpeng Zhao recently described MiCA as a “pragmatic solution,” adding that Binance was ready to work towards becoming compliant.
Following the recent vote, MiCA is expected to be published in the EU’s official journal before it enters into force 20 days later. The bill covers stablecoin issuance and crypto business licensing.
Stablecoin issuers would have a 12-month window to process applications after MiCA enters into force. On the other hand, the application window is 18 months for crypto asset service providers.
With the adoption of MiCA, crypto businesses have an uphill task of meeting the needed transparency requirements within the allocated window.
On the Flipside
- The U.S. has yet to decide whether to create new rules for crypto markets.
- The United Kingdom has unveiled plans to release a crypto regulatory framework within a year.
Why You Should Care
The European Union is one of the most powerful political and economic unions. The approval of MiCA provides an opportunity for the nascent market to thrive in the region.
Read this to learn more about MiCA:
EU’s MiCA Crypto Regulations: What You Need To Know
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