EU finance ministers approve MiCA crypto regulation

The Economic and Financial Affairs Council of the European Union — comprising finance ministers of all member states — has given the green light to the highly-anticipated Markets in Crypto-Assets (MiCA) regulation after a vote on May 16.

Finance ministers from 27 member states voted in favor of the MiCA bill, and amendments to several regulations and directives relating to the new legislation.

Two more pieces of legislation, including regulation on information accompanying transfers of funds and certain crypto assets, were also adopted by the European Parliament in conjunction with MiCA’s adoption.

Related: Industry leaders and policymakers react to passage of MiCA in EU

The European Parliament formally adopted the MiCA legislation on April 20, paving the way for final approval by the European Council before the regulatory parameters take effect.

The legislation sets down clear regulatory guidelines and requirements for using cryptocurrencies and related services and activities across the European Union. The scope of the legislation covers a range of cryptocurrencies, digital assets, utility tokens and stablecoins.

The next step in the long process for MiCA policy to become law across Europe requires the bill to be published in the EU journal. MiCA will come into effect within a year, meaning the regulations will finally become law midway through 2024.

MiCA was first proposed to the European Commission in September 2020 and has faced numerous hurdles and postponements on its way to approval by the EU Parliament and Council. 

The legislation has largely been welcomed by cryptocurrency service providers and proponents alike given that it creates a single market environment across Europe in terms of regulatory requirements and operating procedures.

Related: EU MiCA crypto regulation is a ‘balancing act’: Paris Blockchain Week 2023

Key components of MiCA legislation include registration and authorizations requirements for issuers of cryptocurrencies as well as exchanges and wallet providers. 

Stablecoin issuers also have to meet certain security and risk mitigation requirements, while cryptocurrency custody services also need to ensure sufficient security and safety measures to address potential cybersecurity and operational failures.

The legislation also provides a framework to prevent market abuse, insider trading and manipulative behaviour in the cryptocurrency space.

This is a developing story, and further information will be added as it becomes available.