New EU crypto-regulation

The EU is working on new rules to boost the potential of crypto-assets and curb the threats: Markets in Crypto-Assets (MiCA). MEPs have reviewed and amended the European Commission's proposal and in March 2022 decided to begin negotiations on the final shape of these rules with EU countries in the Council.

In order to encourage the development and use of these technologies, the new rules aim to provide legal certainty, support innovation, protect consumers and investors and ensure financial stability.

The rules cover transparency, disclosure, authorisation and supervision of transactions. MEPs want the issuing of some of the tokens to be supervised by the European Securities and Markets Authority and the European Banking Authority. Businesses dealing with crypto-assets will have to better inform consumers about risks, costs and charges. By regulating public offers of crypto-assets, the rules would ensure financial stability, while other measures tackle market manipulation, money laundering, terrorist financing and other criminal activities.

To reduce the high carbon footprint of crypto-currencies, MEPs are asking the Commission to prepare new rules to include any crypto-asset mining activities that contribute substantially to climate change in the classification system for sustainable activities.

After the MEPs negotiate the final shape of the bill with EU governments, it must be adopted by the Parliament as a whole as well as by EU countries.

The new rules are part of a wider Digital Finance package that supports the EU's digital transition by encouraging innovation while ensuring protection. In March 2022, Parliament adopted new rules to support testing of the distributed ledger technology in market infrastructures. 

In April 2022, Parliament agreed to start negotiations with EU countries on rules that would allow the tracing and identification of transfers of crypto-assets, to prevent their use in money laundering, terrorist financing and other crimes.