What is the regulatory process for cryptocurrencies in the EU?

With the development of the cryptocurrency market in the European Union, there is a need to streamline its activities and protect consumer rights.

The EU has developed special rules, in particular the Markets in Crypto-Assets Regulation (MiCA).

This is the first legislative act in history that provides the crypto market with a clear regulatory framework. Let’s consider the key aspects of digital asset regulation in accordance with MiCA.

What is the Markets in Crypto-Assets Regulation?

MiCA is an EU legal act aimed at regulating crypto-assets, their issuers, and service providers related to electronic means.

The document establishes uniform rules for all European Union countries, preventing legislative fragmentation, ensuring financial market stability, investor protection, and minimizing risks associated with cryptocurrencies.

Main regulatory objectives:

• Consumer protection

MiCA introduces strict rules for cryptocurrency issuers, requiring them to provide accurate information about their projects, risks, and terms of use for digital assets. This increases the safety of users' investments.

• Stablecoin regulation

Particular attention is paid to stablecoins — assets tied to traditional currencies or other means. New requirements for reserves and transparency in cryptocurrencies are intended to prevent instability that could affect financial systems.

• Licensing of crypto service providers

According to MiCA, companies providing storage, exchange, and issuance services for cryptocurrencies must obtain a license to operate in the EU. This increases the responsibility of crypto companies to clients and regulators, ensuring a high level of transparency.

• Anti-money laundering measures

The legal act also introduces additional measures to prevent the use of electronic means in illegal activities such as money laundering and terrorist financing. KYC (Know Your Customer) requirements and reporting for crypto exchanges and platforms become mandatory.

• Reducing environmental impact

The EU will also assess the environmental impact of mining and cryptocurrency use. This issue is becoming relevant due to the high energy costs associated with maintaining the Bitcoin network.

Advantages of MiCA for traders

Thanks to regulation, users gain more protection for their rights and investments. The transparency and accountability of crypto companies reduce the risks of fraud and instability. Additionally, stringent stablecoin requirements ensure the stability of digital assets in demand.

Cryptocurrency regulation is an important step by the European Union towards integrating new technologies into the financial system, protecting traders, and fostering innovation. MiCA creates a reliable foundation for the development of the crypto market, making it more convenient and safer for all participants.

Implementation of MiCA in Ukraine

Ukraine is actively working on developing its own cryptocurrency legislation. The first step was the adoption of the "On Virtual Assets" bill in 2021. However, this law still requires refinements and alignment with European standards.

Our team will continue to provide updates on cryptocurrency regulation. Stay tuned for updates and remain at the forefront of developments.