25-07-2022 | 15:03 PM
European Union’s Markets in Crypto-Assets (MiCA) law
European Parliament agreed upon a new law called MiCA to regulate cryptocurrencies.
The Markets in Crypto-Assets (MiCA) law is the first comprehensive regulation for cryptos.
Key Provisions
Registration- The legislature sets up requirements for crypto issuers to publish a " white paper, & quot; to register with the authorities.
Minimum Liquidity- The legislative mandates currencies like stablecoin issuers to maintain minimum liquidity to provide for sudden large withdrawals by users, and the reserves must also be protected from insolvency.
Supervision- European Banking Authority (EBA) will supervise stablecoins.
As per law, large coins used as a means of payment will be capped at €200 million worth of transactions per day.
Under MiCA, crypto companies will be required to declare their environmental and climate footprint.
It excludes Non-Fungible Tokens (NFT).
Rationale behind the law
It aims to address concerns with crypto like money-laundering, protection of consumers and investors, accountability of crypto firms, stablecoins and the environmental footprint of crypto mining.
MiCA was proposed by the European Commission in September 2020 in an attempt to combat a wave of crypto fundraising schemes known as initial coin offerings (ICO) that frequently proved fraudulent.
Stablecoins came in question amid the downfall of a major stablecoin, Terraform Labs’ Luna.
