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European Parliament approves new regulation ‘MiCA’ for consumer protection for digital assets

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Indrani bose Follow

INDIA

Mar, 21 2022

Mar, 21 2022

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On March 14, this year, proposed European Union Regulation known as Markets in Crypto Assets Regulation, or MiCA, was put for vote, in the European Union Parliament’s Committee on Economic and Monetary Affairs. The European Parliament has approved draft regulations for national regulators to regulate crypto assets, protect consumers, and promote environmental sustainability.

Proposed amendments banning or restricting proof-of-work crypto assets, which would also include effectively ban on Bitcoin (BTC), were rejected. In addition to boosting investor confidence in currencies, the EU's Parliament said MICA will help develop digital services and alternative payment instruments. Legislators approved the rules by a vote of 31 to 4, with 23 abstentions. The main provisions of the MiCA Regulation pursue four objectives: legal certainty, support for innovation, consumer and investor protection, market integrity, and financial stability.

The proposed regulation is part of the digital finance package which also includes a proposal for a pilot scheme for market infrastructures based on distributed ledger technology (DLT) of interest to the security token sector. This was adopted by the Parliament’s Economic and Monetary Affairs Committee in January this year and is due to come into force by the end of 2022.

Through many ways, EU Commission has been trying to regulate the crypto-asset sector. Finally found the option of full harmonization within the EU of the rules applicable to issuers and service providers in crypto assets. A tailor-made legislative regime combined with regulation under the E-Money Directive is the step that the Commission is planning to do for stablecoins.

Although it remains unclear how crypto assets will be evaluated from an environmental regulatory perspective. However, the euro-parliamentarian in charge of the text indicates that cryptos will fall under the taxonomy of the union (the process of classifying economic activity that has a positive impact on the environment), without specifying how to treat them considering this taxonomy.


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Indrani bose

CBW - External Analyst

INDIA

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