What EU’s new crypto regulation means for US and Asia

FTX. Terraform Labs. Three Arrows Capital. The US banking crisis. There isn’t any nice way of saying it: The cryptoverse could use some new rules.

On Thursday, almost a year after the US$60 billion collapse of the UST stablecoin, the industry is finally getting some. The European Parliament voted to approve the Markets in Crypto Assets (MiCA) Regulation, which has received the approval of all its member nations.

The EU on Thursday passed the Markets in Crypto Assets (MiCA) regulation, the first major set of rules for the crypto industry. / Photo credit: Shutterstock

Expectations are riding high on the new regulation, which is focused on protecting crypto investors, maintaining financial stability, and promoting widespread innovation within the industry.

MiCA mandates that crypto asset platforms be licensed in the European Union (EU) member states where they operate. Anyone issuing new digital assets must prepare a whitepaper with detailed information, including the risks involved. Investors are also given the right to withdraw investments within a certain timeframe.

The policy is designed to ensure that “financial services are fit for the digital age, and contribute to a future-proof economy that works for people, including by enabling the use of innovative technologies,” the document stated.

Ernest Urtasun, a Spanish member of the European Parliament, said MiCA would “mark the end of the Wild West era for the unregulated world of crypto assets.”

Another parliamentarian Stefan Berger also pointed out that “with the MiCA Regulation, the European crypto-asset industry has a regulatory clarity which countries such as the US do not have.”

Timing is everything

The vote for MiCA came just days after Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), clashed with US lawmakers on Capitol Hill over the country’s lack of regulation. He was heavily criticized by Republicans for failing to implement clear guidelines for crypto platforms and then suing them for any failure to comply.

The US SEC has been criticized for its handling of crypto market regulations. / Photo credit: Shutterstock

The new EU regulation could be attractive to US companies that are fed up with Gensler’s anti-crypto rhetoric, Politico reported in February. For instance, Coinbase CEO Brian Armstrong has threatened to leave the US if its regulatory environment doesn’t improve.

“Europe is clearly outpacing the US by establishing holistic regulatory frameworks for the crypto asset industry,” tweeted Susan Friedman, head of policy at Ripple, a digital currency firm that’s fighting a legal challenge against the SEC.

“We fully expect Europe to become a natural hub for responsible participants going forward.”

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