EU Officially Regulates Cryptocurrency Markets

While many governments recognize the power of cryptocurrency and the technology behind it, many also criticize how the industry can be regulated. Many companies, especially in the EU, say they will use cryptocurrency but cannot because of a lack of legislation.

However, from July 2022, all of that is about to change as EU power officially decides on the framework that will be used to regulate crypto currency.

What is MiCA?

MiCA stands for Crypto Assets Markets and is an EU internal law governing companies and markets for crypto currencies. It is designed to provide customer protection and enforcement of anti-money laundering restrictions.

This document sets out the minimum requirements for crypto firms when it comes to collecting and storing customer data — which should come as no surprise because the EU has already made significant progress in terms of data protection laws. They also require European crypto companies to take responsibility for recovering crypto money lost through fraud or other security breaches of the company — something that is too late due to the recent rise in cryptocurrency fraud.

This action has strict rules about stablecoins, leaving many complaining that “there is no money for stablecoins under this law” which, in fact, is a good result because stablecoins should not be used to make money in the first place.

The agreement does not include some of the things that people thought would be included, especially the NFTs. The MiCA also does not include restrictions on the method of proof of work that is costly for many Bitcoin fans who fear it will be filed based on earlier rumors.

The agreement was reached by the European Parliament, the commission, and the council — all three parties to the EU legal system. Although the MiCA is complete and accepted by the EU as a whole, it now needs to go to each EU member state to become law. These member states have 18 months to authorize or deny the law, which means it is a long time before cryptocurrency companies are concerned.

What Will Happen When MiCA Launches?

If this law is approved and signed into EU law, it will definitely change some of the ways the cryptocurrency world works. First and foremost, it will be very difficult for new EU companies to enter the space as they will have to prove that they meet all the safety requirements needed to operate as a firm.

The regulation will also make EU citizens feel better about how their data is used and their money is secure when they decide to invest in the cryptocurrency world.

However, in addition, we do not expect any major changes due to this regulation. Which is because cryptocurrency has no boundaries and is divided into difficult to control from the beginning. If an EU company does not like the new rules, it is not difficult to move to Georgia, or another non-EU country nearby and start working again.

It is also difficult to enforce this policy due to the remote nature of the cryptocurrency world. It is unlikely that anyone wishing to invest in a cryptocurrency hedge fund will see office customers or even see them in person. With the size of the EU it is likely that people will invest in projects in other countries from the beginning. This makes it difficult for governments to apply the law when crossing borders or when trying to find a company that does not have an office.

All of these controls will actually control the large companies that run the trade and are recognized by the authorities. And although your information will be accessible on these sites if the authorities request it (especially if they believe you are spending money illegally) there may be authority issues that limit your ability to prosecute.

No matter what the government tries to do they will never really be able to control Bitcoin and other cryptocurrencies, what they can do is to control companies that offer trading with other cryptocurrency services. When this is controlled, it helps many people feel secure enough to enter the space, which means they are usually ready for crypto money — though many strong believers would not agree.

What does MiCA mean for Cryptocurrency?

Because MiCA is not yet officially legal, it does not say much about cryptocurrency. If it is signed into law, there is a chance that cryptocurrency prices could rise if more people feel safe by investing their money. But, do not be too happy as it may also crash if many companies decide to leave cryptocurrency, making it very difficult for EU citizens to trade crypto.

From now on, if you are an EU cryptocurrency investor, don't worry too much right now, as there is also a chance that the MiCA will not be legally signed. There is also the possibility that this is the case, but that it does not work for years down the road.

Also keep in mind that NFTs are not included in the regulation, which means that business will continue in this market as usual. We do not recommend investing in NFTs, as they are generally more risky than cryptocurrency.

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