On Thursday, the European Union became the world’s first group of nations across the globe to bring legislation with an astonishing acceptance in the Parliament for tracing transfers of crypto assets like Bitcoin and other cryptocurrencies highlighting the arrival of a new financial ecosystem.
The uniform law for the European Union received a green light with 517 votes in favour and 38 against. The new legislation drafts common rules for supervision, consumer protection and environmental safeguards of crypto assets including cryptocurrencies (MiCA).
The idea for the same was drafted in June 2022 and aimed to ensure that transfers including cryptocurrencies can be traced and illegitimate transfers should be blocked. The draft includes aspects related to financial crime and market manipulation. It also included a “Travel rule” feature which means that all crypto companies must screen, record and communicate the information of both sender and recipient for crypto transactions.
The new law covers transactions above €1000 from self-hosted wallets, it is important to note that self-hosted wallets are crypto asset wallet addresses of private users, when they interact with hosted wallets, these are managed by crypto assets service providers. Notably, the rule does not apply to a person to person transfers conducted without a provider.
MiCA will regulate all cryptocurrencies which are not regulated under any existing financial regulation. The approved provisions would provide a better ground for consumers to understand the risks and cost asso with it. Thus, it supports market integrity and financial stability and hence will strengthen transparency, disclosure and authorisation related to cryptocurrencies.
The legislation includes measures related to market manipulation, money laundering and terror financing thus breaking the threat regarding the safety and sovereignty of the country. It also includes measures with the objective of a clean environment where
cryptocurrencies have to disclose information regarding energy consumption.
Thus, the new legislation of the European Union will act as a benchmark for other countries across the globe in drafting legislation for cryptocurrencies and other assets. The law has very comprehensively added important aspects regarding the same. Thus the new legislation will bring a new period of financial services in the contemporary global order.
