European Cryptocurrency Regulations: A Guide

crypto regulations

Even though traders have specialized in cryptocurrency for many years now, BTC and other digital coins are far from entering the mainstream. This is not only thanks to a lack of centralization and tethering, but also to the fact that different territories seem to have different ways of approaching the asset phenomenon. 

However, the wider public is waking up quickly to the benefits of diversifying into crypto. It is now simple enough to open a trading app, set up a digital wallet, check out a review for Omplix broker – the list goes on. Therefore, more and more people will be keen to brush up on regulatory practices and details for crypto across the miles.

With rules in crypto trading and regulations having changed in the recent past in the European Union, it’s time to consider what ties you can expect if you are trading on the continent any time soon.

The European Union and cryptocurrency – what is MiCA?

Of course, there’s no real way to keep all crypto laws across Europe ‘brief’, but the challenge has been accepted. Ultimately, given the wide expanse that is Europe – and the fact that not all countries are member states of the EU – laws will vary wildly from place to place.

However, the EU has a strong clause against money laundering. What’s more, a proposition known as the Markets in Crypto-Assets Regulation, or MiCA, emerged in late 2020. This proposed regulation would, if brought into effect, overwrite rules for how EU member states process and handle crypto with immediate effect.

MiCA was drafted into view largely thanks to the fact that – for the most part – crypto has gone unregulated across Europe. The reasons for this should be obvious – it is still very much ‘new’ money and technology –

and it takes a considerable time for legislation to keep up with societal change and expectations.

What MiCA seeks to achieve

MiCA’s aim is, crucially, to ensure that any crypto provider in the EU is fully regulated under a blanket scheme. This means that any assets considered crypto, that are not currently bound to EU regulation, will receive new oversight. That also covers stablecoins, those that are considered the ‘safer’, tethered variations of the crypto standard. 

MiCA seeks to cover the whole spectrum of cryptocurrency trading and management in the EU, even when it comes to global crypto assets. Where they are held, traced to, exchanged for, and order executions – all will come under greater scrutiny. Ultimately, it may mean that, in future, EU-based or EU-affected crypto trades will be subject to a list of rules determined by the body.

Issuers and those offering asset services will be subject to additional checks and measures. The EU’s MiCA proposal will ensure that all providers and traders follow the same set of rules and demands to remove uncertainty. 

What is interesting about MiCA, of course, is that it will affect crypto globally. Even if you are not based within the European Union, any trading you undertake with member states, including anything as simple as sales, will fall under this scrutiny. This means that even the United Kingdom, who split from the EU in 2019/20, will feel the ramifications of the new laws.

Many believe that MiCA could do more good than harm – in the sense that the rules could establish Europe as a superpower in crypto trading the world over. However, this really does remain to be seen.

When will MiCA take place? 

That, too, remains to be seen. The initial proposals were leveled in late 2020, and with EU legislation being lengthy to establish and work through, the changes have been a long time coming. There is also the fact that, for the time being, crypto remains incredibly speculative. That means it will be some time before it becomes ‘mainstream’ in any sense of the word. Could MiCA help to propel crypto to mainstream status? It is certainly a theory. 

However, the processing time for MiCA was leveled, at an estimate, of between 18 and 24 months. We’re approaching this benchmark at the time of writing, and there is no clear movement – meaning that we will likely need to wait a little longer still before the new rules come into effect. For all that digital transformation is prevalent in the here and now, traditional laws and statutes remain notoriously difficult to alter and process.

Ultimately, this makes it a good time for traders and providers alike to acquaint themselves with the plans – and what it will all mean for the future of their businesses and portfolios for the years to come.  

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