Digital finance: EU Commission welcomes political agreements on milestone regulatory framework for crypto-assets

The EU Commission welcomes the political agreement reached yesterday between the European Parliament and the Council on the Commission’s proposal for a Regulation on markets in crypto-assets (“MiCA”). This agreement marks a milestone in delivering on the Commission’s digital finance package of September 2020. The EU is among the first major jurisdictions worldwide to design a comprehensive regulatory framework for crypto-assets. This new framework will protect consumers, market integrity and financial stability. It will provide a clear legal framework in the EU enabling further innovation on a safe and sound basis. The MiCA framework covers crypto-assets that are not already regulated by other EU financial legislation. For “stablecoins”, the agreement sets out strict requirements on establishment, authorisation and reserve management, including EU supervision for significant “stablecoins” that are systemically important. Crypto-asset service providers will also need to be authorised in the EU, and as a result, will be able to provide their services throughout the Union using the EU passport. The Commission also welcomes the political agreement reached by co-legislators on 29 June on its proposal to amend the Transfer of Funds Regulation (TFR). The agreement provides for an obligation for all crypto service providers involved in crypto transfers to collect data on the originators and beneficiaries of the crypto-assets transfers they operate, and make them available to the competent authorities in charge of the fight against money laundering and terrorism financing. These new rules will significantly enhance the monitoring and traceability of crypto-asset transfers and ensure compliance with the relevant measures called for in the Financial Action Task Force (FATF) Recommendations. Mairead McGuinness, Commissioner for Financial Services, Financial Stability and Capital Markets Union, said: “I warmly welcome the two political agreements between the European Parliament and Council on MiCA and the Transfer of Funds recast. Together, these proposals will bring crypto markets into the regulated space and address risks related to consumer protection, market integrity, financial stability, and financial crime. At the same time, MiCA will bring legal certainty for market participants and promote innovation in the single market with a new EU passport for crypto service providers. The EU is the first jurisdiction to set up such a comprehensive framework for crypto-assets. I hope that other jurisdictions will follow and international cooperation will continue in that area.”