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EU agrees on regulations to tame ‘Wild West’ crypto market

Banking And Finance

EU agrees on regulations to tame ‘Wild West’ crypto market

EU officials secured a deal on what is likely to be the first chief regulatory framework for the cryptocurrency industry in Europe.

The EU lawmakers, European Commission, and member states hammered out a deal in Brussels after hours of negotiations. The move arrived a day after the three primary institutions of the EU finalized measures aimed at stamping out money laundering in crypto.

The new guidelines come at a difficult time for digital assets, with bitcoin facing its worst quarter in over a decade.

The momentous law, known as Markets in Crypto-Assets, abbreviated to MiCA, is designed to make life more challenging for numerous players in the crypto market, including exchanges and issuers of so-called stablecoins. These tokens must be fixed to existing assets like the US dollar.

Under the new law, the stablecoins like tether and Circle’s USDC will be needed to maintain sufficient reserves to meet redemption requests in the event of mass withdrawals. Stablecoins that become too large are also limited to 200 million euros in daily transactions.

The new law gave the European Securities and Markets Authority discretionary powers to step in to restrict or ban crypto platforms if they are observed not correctly protecting investors or threatening market integrity or financial stability.

The new rules will also address environmental issues surrounding crypto, with firms forced to disclose their energy consumption and the impact of crypto assets on the environment.

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