EU Crypto Regulation Still Faces Long Legislative Road Despite Vote 

The European Parliament’s Economic and Monetary Affairs Committee will vote around noon ET (5 p.m. CET) Monday (March 14) on the draft of the Markets in Crypto-Assets Regulation, which faces a long road ahead before it becomes law, even if the committee approves the text today. 

The vote will be conducted by a committee and not by the European Parliament’s (EP) plenary. This means that, if adopted, the draft text will become the official text for the European Parliament to work on, but this wouldn´t be the final text adopted by the EP. 

Nonetheless, this is a very important step in the legislative process as the draft proposal is a text already agreed upon by the European Commission and the first working group in the Parliament where members of most of the political parties are involved. 

The draft proposal contains hundreds of amendments, and the Committee needs to decide if all of them are accepted, or alternatively, which ones are. If the Committee fails to adopt the draft report, it will mean going back to the drawing board to further discuss the proposed amendments. 

Alternatively, if the text is adopted, as it would be expected at this stage, the Committee will also vote on whether to start interinstitutional negotiations. 

Interinstitutional negotiations take the form of tripartite meetings (“trilogues”) between the European Commission, the European Parliament and the Council and they have become standard practice for the adoption of EU legislation. As soon as the committee has adopted its report, it may decide to enter into negotiations.  

Their purpose is to reach a provisional agreement on a text acceptable to both the Council and the Parliament. Trilogues may be organized at any stage of the legislative procedure (first, second or third reading). Any provisional agreement reached in trilogues is informal and has, therefore, to be approved by the formal procedures applicable within both institutions. In Parliament, the text of the provisional agreement has to be approved by a vote in committee after which it is confirmed in plenary. 

In summary, if the Committee adopts the proposed text for MiCa and it votes for the start of the interinstitutional negotiations, this will only mean that the EP has a mandate to negotiate and a text to work with. 

All this complexity may also bring flexibility that facilitates informal agreements and may shorten official deadlines. For instance, trilogues meetings allow small groups of representatives from each institution to iron out small differences in the document and accelerate the adoption of an agreement. 

Once the parties reached an agreement, the European Parliament will have to vote on a plenary session for the document’s approval. If approved, the council and member states will also have to approve the text to become law. If the EP doesn´t approve the document, it will be sent back to the committee for further amendments.  

This process may be repeated up to three times. If a proposal is approved the first time, it is said that it is approved at first reading, if the institutions don´t get an agreement after three readings, the proposal is rejected. 

Although this system is designed to allow the institutions to work in the same proposal several times before a formal rejection, the trilogue meetings and other informal meetings have allowed the institutions to approve 99% of the legislative proposals in first reading or early second reading. 

In other words, MiCA may pass an important hurdle today with the Committee´s adoption of the proposal and the vote to start the interinstitutional negotiation, but Europe may still need several months before having a final document approved. 

Read More: EU Crypto Regulation May Need Clarification From Day One