EU Parliament Approves Crypto Licensing, Funds Transfer Rules

Lawmakers in the European Union on Thursday voted 517-38 in favor of a new crypto licensing regime, Markets in Crypto-Assets (MiCA), with 18 absentions, making it the first major jurisdiction in the world to introduce a comprehensive crypto law.

The European Parliament also voted 529-29 in favor of a separate law known as the Transfer of Funds regulation, which requires crypto operators to identify their customers in a bid to halt money laundering, with 14 abstentions.

The vote follows a Wednesday debate in which lawmakers largely supported plans to make crypto wallet providers and exchanges seek a license to operate across the bloc, and require issuers of stablecoins tied to the value of other assets to maintain sufficient reserves.

In a tweet, the European Commission's Mairead McGuinness described the vote as a "world first" for crypto rules.

"We’re protecting consumers and safeguarding financial stability and market integrity," McGuinness said. "The rules will start applying from next year."

In a statement released by the European Parliament, Stefan Berger, the lawmaker who led negotiations on the law, said the rules put the EU "at the forefront of the token economy."

"The European crypto-asset industry has regulatory clarity that does not exist in countries like the U.S.," Berger said. "The sector that was damaged by the FTX collapse can regain trust."

The European Securities and Markets Authority also welcomed the vote in a tweet, and said it will "announce in due time" its timetable for drafting secondary legislation under MiCA. "ESMA still warns consumers that investing in cryptoassets is a risky endeavour with limited safeguards at this stage," the EU agency added.

The Markets in Crypto Assets regulation was first proposed by the European Commission in 2020, and to pass into law has to be approved by the parliament and the EU’s Council, which represents the bloc’s member states. Its main provisions start to apply just over 12 months after publication in the EU’s official journal, likely in June.