Reports said that officials from the European Union have agreed on a landmark law that will make life tougher for crypto issuers and service providers under a new single regulatory framework.
It has been reported that Stefan Berger, European Parliament member and rapporteur for the MiCA regulation, the person appointed to report on proceedings related to the bill, broke the news on Twitter, saying that a “balanced” deal had been struck, which has made the EU the first continent with crypto-asset regulation.
However, known as the Markets in Crypto-Assets (MiCA) framework, the provisional agreement includes rules that will cover issuers of unbacked crypto assets, stablecoins, trading platforms, and wallets in which crypto assets are held, according to the European Council.
Bruno Le Maire, the French Minister for the Economy, Finance, and Industrial and Digital Sovereignty, claimed the landmark regulation “will put an end to the crypto wild west.”
The report said that in the wake of the dramatic collapse of Terra, the MiCA regulation aims to protect consumers by “requesting” stablecoin issuers to build up a sufficiently liquid reserve. In a Twitter thread, Ernest Urtasun, a member of the European Parliament, explained that reserves will have to be “legally and operationally segregated and insulated” and must also be “fully protected in case of insolvency.”
Likewise, it will see a cap on stablecoins of 200 million euros in transactions per day.
Crypto Twitter users have already branded the regulation as unworkable, with 24-hour daily volumes of Tether (USDT) at $50.40 billion (48.13 billion euros) and USD Coin (USDC) at $5.66 billion (5.40 billion euros), as of July 1. There would also be difficulty enforcing these rules for decentralized stablecoins, such as Dai (DAI). The agreement came on the same day as Circle’s launch of its euro-backed stablecoin — Euro Coin (EUROC).
Crypto-asset service providers (CASPs) will be required to adhere to strict requirements aimed at protecting consumers and can also be held liable if they lose investors’ crypto-assets. Urtasun explained that trading platforms will be required to provide a white paper for any tokens that don’t have a clear issuer, such as Bitcoin (BTC), and they will be liable for any misleading information.
Thus, there will also be warnings for consumers about the risks of losses associated with crypto assets and rules on fair marketing communications.