The European Union (EU) Parliament has approved the pioneering Markets in Crypto-Assets (MiCA) regulation in a 517-38 vote, making it the first major jurisdiction to establish a comprehensive crypto law. Additionally, the EU Parliament voted 529-29 in favor of the Transfer of Funds regulation, a separate law that requires crypto operators to identify their customers, aiming to combat money laundering.

The approval of MiCA followed a debate in which the majority of lawmakers supported the proposal to mandate crypto wallet providers and exchanges to obtain licenses for operating across the EU bloc. Furthermore, the regulation requires issuers of stablecoins linked to other assets to maintain adequate reserves.

Mairead McGuinness, from the European Commission, hailed the vote as a “world first” for crypto regulations, emphasizing the protection of consumers and the safeguarding of financial stability and market integrity. The rules are expected to be enforced from next year.

According to Stefan Berger, the lawmaker who led the negotiations on the law, the EU now stands “at the forefront of the token economy.” He highlighted the regulatory clarity provided by the European crypto-asset industry, which is absent in countries like the US.

The European Securities and Markets Authority (ESMA) also welcomed the vote but warned consumers about the risks associated with investing in crypto assets. ESMA will soon announce its timetable for drafting secondary legislation under MiCA.

First proposed by the European Commission in 2020, the MiCA regulation required approval from both the EU Parliament and the EU Council, representing the bloc’s member states. The main provisions are set to take effect approximately 12 months after their publication in the EU’s official journal, likely to occur in June.

The European Commission posted to its 1.6M followers “We are pioneering the world’s first regulation of crypto assets. While crypto assets have great potential, they are largely unregulated, which has led to concerns about consumer protection, market integrity and financial stability. To address these concerns, two years ago we proposed MiCA to regulate crypto assets. Today, the European Parliament gave its final green light to this important step. MiCA will regulate the issuers of crypto assets, including stable coins, and the vast ecosystem of crypto asset service providers. This will ensure a safe and sound framework for the development of these markets, allowing us to harness the innovative potential of these asset classes while addressing risks.”

Stay tuned for expert analysis of MiCA and how it could affect your business soon.