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EU States Approve World’s First Comprehensive Crypto Rules

 |  May 16, 2023

European Union members have given final approval to the world’s first comprehensive cryptocurrency regulations.

EU finance ministers met in Brussels Tuesday (May 16) to approve the regulations, which were accepted by the European Parliament in April, Reuters reported, noting that regulating the industry has gained new urgency following last year’s collapse of FTX.

“Recent events have confirmed the urgent need for imposing rules which will better protect Europeans who have invested in these assets, and prevent the misuse of crypto industry for the purposes of money laundering and financing of terrorism,” said Swedish finance minister Elisabeth Svantesson, whose country holds the EU presidency.

The rules, expected to be rolled out next year, mandate that companies get a license if they wish to issue, trade and safeguard crypto assets, tokenized assets and stablecoins in the EU.

The EU parliament approved the crypto licensing framework, Markets in Crypto-Assets (MiCA) April 20 in a 517-38 vote.

“This puts the EU at the forefront of the token economy,” Stefan Berger, lead MEP for the MiCA rules, said at the time. “Consumers will be protected against deception and fraud, and the sector that was damaged by the FTX collapse can regain trust.”

MiCA’s text said one of its “priority areas” is to make sure that the EU financial services regulatory framework is “innovation-friendly and does not pose obstacles to the application of new technologies,” going on to say that its goal is to outfit Europe for the digital age and to build a “future-ready economy that works.”

Read more: European Commissioner: Crypto Rules Needed Worldwide

The approval draws a sharp contrast between Europe and the U.S., which “has so far taken the approach of policing the crypto sector through a series of enforcement actions, which many industry actors have decried as opaque and unhelpful,” PYMNTS reported.

The Securities and Exchange Commission (SEC) has gone after several key players in the sector, including Terra, Coinbase, Kraken, Paxos and Binance, arguing that the crypto firms either offered customers products that were in effect illegal securities offerings or violated investor protection laws.

“[T]he SEC’s approach to the crypto economy [is] confusing, unclear, opaque and ultimately blind to the harm its regulation by enforcement strategy is doing to lawful companies in this country,” said Kristin Smith, CEO of the Blockchain Association.

Rep. Patrick McHenry of North Carolina, who chairs the House Financial Services Committee, said last month he expects to soon put forth cryptocurrency legislation.