The European Parliament’s Economic and Monetary Affairs Committee voted on Monday to propose a version of the highly controversial Crypto Asset Markets Bill, or MiCA. The bill is now heading for final negotiations with the European Commission, the Council of the European Union and the European Parliament.
ECON passed the Encryption Framework Policy by a vote of 28 in favor and one against. National representatives in the European Council voted on the proposal last week. Then, after translating the text into over 20 official EU languages, the next step towards formal adoption of the legislation comes with a final vote in the full European Parliament.
MiCA includes a 12-18 month adaptation period to prepare for the new laws being put in place, which means the laws could come into full effect in early 2024 at the earliest.
“It is important to ensure that the [European] EU financial services legislation is fit for the digital age and contributes to a future-ready economy that works for people, including by enabling the use of innovative technologies,” said the text of the MiCA of October 5.
The MiCA legislation, first introduced in 2020, aims to provide a regulatory framework for digital assets for EU member states by 2025. The EU-wide regulatory framework that will grant rights passport to crypto businesses working across the continent.
The proposal also proposes a bespoke legislative regime for crypto assets and relevant service providers not covered elsewhere in the EU financial services regime. While the original draft had included explicit language that would have banned proof-of-work-based cryptos like Bitcoin, due to power consumption concerns, the provision was rolled back after an outcry from the crypto industry.
The development comes almost two years after the European Commission published the EU’s first legislative framework for crypto assets, which was part of the wider policy initiative on digital finance. In addition, the MiCA will offer a pilot scheme for crypto-related market infrastructures, which represents a so-called “Sandbox” approach. The term has particular relevance to the crypto industry, and the EU program has been described as a controlled environment in which new ventures or new ventures from established brands could test their ideas live.
Nevertheless, European regulators have yet to stake out the DeFi territory and its various applications. Recent media coverage has also highlighted the emergence of non-fungible tokens (NFTs). That said, the regulation of these transformative technologies is unclear. There is no such federal agency that has clear authority over a DApp, an NFT, or even the entire industry.