Amid the crash of the crypto market that has resulted in massive loss of investors’ funds, the call for government’s regulation of the industry has never been louder.
Last month, Microstrategy’s CEO Michael Saylor called on governments to step in and save the crypto industry from total collapse by cracking down on crypto industry’s shaky practices. It is a call that has been widely debated, but the U.S. and other leading economies have been dragging feet, focusing only on combating the use of cryptocurrencies to evade tax, launder money and sponsor terrorism.
Based on months of relentless bear market that saw the crypto industry lose about $2 trillion of its value, the European Union is moving to enact a set of laws that will regulate the industry.
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Reuters reports below that the bloc has agreed on ground-breaking rules for regulating crypto assets, according to a statement issued by the EU lawmakers on Thursday.
Representatives from the European Parliament and EU states thrashed out a deal on the markets in crypto assets (MiCA) law, which is expected to come into force around the end of 2023.
“Today, we put order in the Wild West of crypto assets and set clear rules for a harmonized market,” said Stefan Berger, the center right lawmaker who led negotiations on behalf of the parliament.
“The recent fall in the value of digital currencies shows us how highly risky and speculative they are and that it is fundamental to act,” Berger said.
MiCA will be the first comprehensive regime for crypto-assets in the world and will contain strong measures to guard against market abuse and manipulation, added Ernest Urtasun, a Green Party lawmaker in the parliament.
The new law gives issuers of crypto assets and providers of related services a “passport” to serve clients across the EU from a single base, while meeting capital and consumer protection rules.
The United States and Britain, two major crypto centers, have yet to approve similar rules.
Crypto assets came under pressure after the collapse of TerraUSD and luna tokens last month, with major US cryptocurrency lending company Celsius Network this month freezing withdrawals and transfers.
Bitcoin collapsed this month to around $17,600, and was trading around $18,900 on Thursday, well below its late March level of $48,200 as investors nurse losses.
Negotiations on Thursday focused on issues such as supervision and energy consumption of cryptoassets.
“We have agreed that crypto asset providers should in future disclose the energy consumption and environmental impact of assets,” Berger said.
EU states will be the main regulators for crypto companies, though the bloc’s securities watchdog ESMA will have powers to step in if investor protection or financial stability is threatened, lawmaker Urtasun said.