Europe Approves Comprehensive Cryptocurrency Regulations: A Positive Step for Global Investors and Financial Businesses
Recently, the European Parliament approved extensive cryptocurrency regulations. This is big news for crypto investors and financial professionals worldwide, as it presents a positive alternative. The EU member states have already supported laws covering cryptocurrency assets, including tradable tokens like Bitcoin and Ethereum.
The regulations were approved on Thursday by the European Parliament and are among the world’s first comprehensive regulations to regulate the “wild west” of cryptocurrency. It is hoped that investors will be protected from misuse and fraud. Using blockchain technology, such as NFTs, the relevant regulations will be expanded to secure crypto assets.
The European Parliament aims to provide human-centered regulations with a majority vote for industries. Due to scandals and failures in exchanges in recent months, there is hope that these regulations will be implemented.
In November, the FTX platform and its sister trading house, Almeda Research, went bankrupt, which was involved in a virtual trading business. At that time, the market value was $32 billion.
During a parliamentary debate on Wednesday, European Union Commissioner Mairead McGuinness said that the implementation of these regulations for financial services would regulate FTX’s activities. This could save investors from a significant loss in value.
MiCA, which stands for Markets in Crypto-Assets, is considered as a regulatory body for crypto markets. Under MiCA, Crypto Asset Service Providers (CASPs) will be responsible for ensuring the security of their customers’ digital wallets, and they will be liable if their clients’ cryptocurrency investments are lost.
McGuinness stated in Strasbourg, “We believe that large providers, such as FTX for example, who have operated under the jurisdiction of the European Union, may not be allowed to operate under MiCA due to various regulations.”
In an effort to reduce the high carbon footprint of cryptocurrency, major providers will also need to disclose their energy consumption, under the efforts of the European Union.
By enforcing regulations for fund transfers, there will be greater oversight on crypto-set trades, which will bring them closer to traditional financial systems. EU stated that using cryptocurrency for illegal activities, such as money laundering, will become more difficult.
During a parliamentary debate, one of the EU Parliament members, Ernest Urtasun, said, “Regulations for crypto-sets mark the end of the Wild West era for the irregular world of cryptocurrency.” Monitoring crypto-set trading by EU lawmakers will have an impact and help reduce illicit activities.
For over a decade, many first-time investors have suffered significant losses due to the lack of regulation, and a secure haven has been provided for scammers and international criminal networks. Therefore, stricter guidelines should be established for crypto-set trading through regulations to provide a safe environment for investors.
In addition, some people have criticized the proposed legislation. Elizabeth McCaul, a member of the Supervisory Board of the European Central Bank, wrote in a blog post that the rules should be proportional to the principles of regulatory compliance and that important CSSP requirements and increased supervision should both be met. This will provide investors with a comfortable and secure environment and may help reduce fraud and criminal networks for those engaged in crypto-set trading.
We believe that a human-centered framework enables industries to develop in a collaborative and secure environment,” said a lawyer. He claimed that stopping regulatory innovation could be harmful to businesses, and expressed his hope that the regulations would serve as a model for other countries.
The member states of the European Union have decided to formally create regulations, which will gradually come into effect from July 2024. The European Union is also preparing to present proposals for a digital euro later this year.