LONDON (AP) — The European Union’s broad set of hardened cryptocurrency rules won final approval from member states Tuesday, giving the 27-nation bloc a global lead in regulating the free sector.
The European Council adopted the package of rules, known as Markets in Crypto Assets, or MiCA, in the final step of the bloc’s legislative process. Lawmakers in the European Parliament endorsed the rules in April and they are expected to come into effect in phases from July 2024.
Tighter European scrutiny follows a series of high-profile crypto scandals, including the collapse of trading company FTX and the implosion of stablecoin TerraUSD.
The rules aim to improve transparency and combat money laundering and will cover stablecoins, which are typically pegged to a hard currency or a commodity like gold that makes them less volatile than regular cryptocurrencies.
Other digital tokens, as well as bitcoin-related services such as trading platforms and digital wallets, are also subject to the rules, but not bitcoin itself.
“Recent events have confirmed the urgent need to impose rules that will better protect Europeans who have invested in these assets and prevent the misuse of the crypto industry for the purposes of money laundering and terrorist financing,” the Swedish Finance Minister said. , Elisabeth Svantesson, whose country holds the rotating presidency of the European Council.
Under MiCA, which has been in the works since 2020, cryptocurrency companies will need approval to operate in the EU and will be liable if they lose investor assets. The authorities will compile a public list of “non-compliant” companies.
The rules, intended to maintain financial stability, include provisions to combat market manipulation and insider trading. Companies that issue or trade crypto assets will be required to disclose information about the risks, costs and fees faced by consumers.
Major cryptocurrency companies will have to disclose how much energy they use. The enormous amount of energy used in bitcoin mining to create new currencies has fueled concerns about the carbon footprint of cryptocurrencies.
The US has made little progress in stepping up supervision of cryptocurrencies and digital assets, while the UK is considering comments on proposed crypto regulations outlined last year.
Some European countries, such as Germany, already have basic crypto regulations.