Regulatory agreements that will be the first major regulatory framework for the cryptocurrency industry were reached on Thursday by the European Commission, EU lawmakers and member states on June 30 in Brussels, CNBC reported.
Negotiations on a regulatory mechanism continued for several hours. The landmark law, known as Markets in Crypto-Assets, or MiCA, will regulate the activities of many players in the crypto market, including exchanges like Cryptex and issuers of so-called stable coins (stablecoins), tokens that must be pegged to existing assets such as the US dollar.
Under the new rules, stablecoins like tether and USDC Circle will need to maintain sufficient reserves to meet redemption requests in the event of mass withdrawals. The growing too large stablecoin segment is also facing a €200 million per day transaction cap.
The European Securities and Markets Authority (ESMA) will be given the power to ban or restrict the operation of crypto platforms if it is seen that they do not adequately protect investors or threaten market integrity or financial stability.
The previous proposal would have led to the abandonment of crypto-mining, the energy-intensive process of producing new units of bitcoins and other tokens. However, in March lawmakers voted against it.
The rules will not affect non-issuer tokens such as Bitcoin, however, tr ading platforms will need to warn consumers of the risk of loss associated with trading digital tokens. NFTs, which represent ownership of digital objects such as works of art, have been excluded from the legislation. The EU Commission has been tasked with determining whether the NFT needs its own regime within 18 months.
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