The European Parliament has approved the European Commission’s (EC) landmark legislative proposal for Markets in Crypto Assets (MiCA). After hours of negotiating, EU lawmakers hammered out a deal to bring more clarity on crypto-assets and stablecoins.
MiCA seeks to include supervisory provisions, consumer protections, and environmental safeguards in the current agreement across the 27 member states.
The agreement, which is presumed to be the first major regulatory framework for the crypto industry, mandates that stablecoin issuers maintain a sufficiently liquid reserve.
In a series of tweets, Ernest Urtasun of the Greens parliamentary group stated that large stablecoins will be subject to strict operational and prudential rules, with restrictions if they are widely used as a means of payment, and a cap of €200 million in transactions per day.
The law also establishes stringent requirements for algorithmic stablecoins such as TerraUSD (UST), as well as strict guidelines for the composition of assets backing USD Tether (USDT).
Also Read: EU Commission Supports Ban On Large-Scale Stablecoins
Stablecoin issuers must build a liquid reserve with a 1/1 ratio, partly in the form of deposits, to protect consumers.
“Today, we put order in the Wild West of crypto assets and set clear rules for a harmonized market that will provide legal certainty for crypto asset issuers, guarantee equal rights for service providers and ensure high standards for consumers and investors,” said Stefan Berger, the lawmaker who led negotiations on behalf of the European Parliament.
The European Securities and Markets Authority (ESMA) will be given authority to form regulatory technical standards requiring crypto-asset service providers to declare information on their environmental and climate footprint.
According to the rules, the holders will be offered a claim at any time and at no cost by the issuer, as well as adequate minimum liquidity. The European Banking Authority (EBA) will oversee all so-called “stablecoins”.
To operate within the EU, crypto-asset service providers (CASPs) will need authorization, which will be granted within three months.
The EU Commission has been tasked with determining whether NFTs require their own regime within 18 months.
Transfers between exchanges and “un-hosted wallets” owned by individuals must be reported if the amount exceeds 1,000 euros, a contentious issue for crypto enthusiasts who frequently trade digital currencies for privacy reasons.
