EU crypto customers are at the mercy of national regulators as the EU Parliament postpones the drafting of its Markets in Crypto Assets Bill for the second time.
The release of the draft has been pushed back to April 17, 2023, because of delays in translating the 400-page document into the bloc’s 24 languages, according to a person familiar with the matter. Under EU law, all citizens have the right to communicate and document in one of the bloc’s official languages.
MiCA will be applicable only in 2024
This new delay marks the second postponement since the November 2022 announcement that the 400-page draft would be released in February 2023 after being finalized in October 2022.
In accordance with the required legal procedure, the European Parliament will debate the MiCA at a plenary meeting in mid-April 2023. After the meeting, lawmakers will take 12 to 18 months to draft the technical specifications of the bill. As a result, the bill may only take effect in 2024.
Designed to bring regulatory uniformity across the EU bloc, the new bill forces crypto asset issuers to comply with anti-money laundering and market manipulation rules.
“The lack of an overall Union framework on crypto-assets… could lead to regulatory fragmentation, which would distort competition in the single market, lead to crypto-asset service providers increasing their activities on a cross-border basis and more difficult and lead to regulatory arbitrage,” the bill warns.
The bill also mandates consumer protection for crypto assets, including stablecoins, outside of existing EU financial services laws. In addition, stablecoin issuers must hold 100% reserves and implement a complaint process. Miners must report their energy consumption to reduce climate concerns.
Once the bill becomes law, domestic regulators must implement it at the national level. EU lawmakers originally proposed MiCA in 2020.
EU crypto investors at the mercy of national regulators
The delay in issuing bills in the bloc’s 24 languages may not materially alter the risk landscape for European crypto investors investing in offshore exchanges.
Following the collapse of FTX, several industry experts and parliamentarians, including José Manuel Campa, head of the European Banking Authority, admitted that the bill had “blind spots”.
Notably, the banker pointed out that the bill does not prevent EU citizens from carrying out transactions with foreign crypto companies. MiCA requires a firm’s compliance with only one national authority to provide services to the entire block. Cypriot regulators suspended the EU license of the EU business unit of Bahamian exchange FTX in Cyprus. The suspension came shortly after the exchange filed for bankruptcy in November 2022.
The governor of the French central bank has asked the French government to enforce stricter compliance while the bloc awaits MiCA.
“France should as soon as possible switch to mandatory authorization of DASPs (Digital Asset Service Providers) and not require their registration,” Francois Villeroy said in his New Year’s speech on January 5, 2023.
France’s markets watchdog, the Autorité de Controle Prudentiel et de Resolution (ACPR), authorized Binance to operate as a digital asset service provider in May 2022.
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