March 30, 2023

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EU countries vote on encryption legislation to better protect consumers – IT Pro – News

European member states have approved the MiCA legislation, which, among other things, must protect consumers from fraud. Companies active in the cryptocurrency world should also point out their impact on the climate. The European Union has been working on the legislation since 2020.

Issuers of cryptocurrency, stablecoins, and crypto services such as wallets will be subject to the Markets in Crypto-Asset Act, which, among other things, must protect investors and “financial stability.” In addition, the law must European Council Enabling innovation and an “attractive crypto marketplace”. French Finance Minister Bruno Le Maire said the law would end the “wild west of cryptocurrency”.

The law requires crypto service providers, such as wallets, to protect consumers’ wallets and become liable if they lose investors’ currency. Under the MiCA, abuse of the crypto market must also be faced, with the EU specifically referring to market manipulation and insider trading. For example, crypto service providers must obtain approval from national governments before they can operate in Europe.

Stablecoin providers are also required to have “sufficient liquidity” as a buffer, at a ratio of 1/1. This should be partly in the form of bank deposits. Stablecoins will also be subject to supervision by the European Banking Authority (EBA) and issuers must have a physical presence in the European Union before stablecoin providers are allowed to issue coins in Europe.

The council notes that some member states already have their own coding legislation, but the European legislation ensures that providers deal with the same rules across the market. The European Commission proposed the law in September 2020, and Parliament has already approved it. Most NFTs do not fall under MiCA, although the European Commission has been called to investigate whether legislation is necessary here as well. Tweakers wrote earlier Background article on MiCA

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