- ECB is reportedly planning to warn EU member states concerning overlapping of crypto regulations.
- EU officials are already preparing to implement the MiCA framework to govern virtual assets and crypto issuers.
The European Central Bank (ECB) is working on implementing a new law that focuses on the importance of harmonizing crypto regulations. Financial Times talked about the Commission’s concerns about regulatory overlap in a Sunday report. The ECB is particular about overlap possibilities between crypto companies and central banks in the European Union. Notably, officials of central banks in the EU and crypto companies are planning to move towards implementing the Markets in Crypto-Assets (MiCA) framework.
ECB expresses concern crypto regulation overlap
The MiCA proposed regulation is designed to regulate distributed ledger technology (DLT) and virtual asset regulation in the EU. The reporter for the MiCA regulation, also a European Parliament member, Stefan Berger, announced the EU officials’ agreement on the MiCA regulation. In a tweet, he said, “Europe is the first continent with crypto-asset regulation.”
MiCA Trilog: Durchbruch! Europa ist der erste Kontinent mit einer Krypto-Asset Regulierung. Parlament, Kommission & Rat haben sich auf ausgewogene #MiCA geeinigt. Für mich als Berichterstatter war wichtig, dass es hier keine Verbannung von Technologien wie #PoW gibt /1
— Stefan Berger (@DrStefanBerger) June 30, 2022
Specifically, the framework covers rules that will govern issuers of unbacked crypto assets, stablecoins, crypto wallets, and trading platforms. As the European Council reached an agreement on the framework, regulators from 19 EU member states are attending a supervisory board meeting to discuss the framework further. The EU member states will reportedly meet sometime next month on MiCA and the possibilities surrounding its implementation.
Upon implementing the MiCA framework, the law will guide virtual asset service providers to abide by specific requirements designed for the investors’ protection. Additionally, the incoming framework will educate and warn clients against the risks associated with investing in a volatile crypto market.
The proposed crypto regulation will be under review for 18 months. During the period, EU officials will assess the regulatory framework and determine if the law encompasses non-fungible tokens (NFTs) and other crypto-related products.
An unnamed national regulator commented on the EU proposed regulatory framework, saying:
It’s very challenging. With MiCA 18 months away, are you better to say, ‘until it’s in, do what you like, there’s no regulation’ or are you better to try to get a handle on it?
Before implementing MiCA, individual EU member states will need to independently handle crypto regulation. For instance, the Federal Financial Supervisory Authority, or BaFin, in Germany issues licenses to crypto firms.
European Council agrees on anti-money laundering authority
However, the European Council recently agreed to form an Anti-Money Laundering (AML) body to supervise crypto asset service providers. The Council agreed its partial position on the proposal o a dedicated Anti-Money Laundering Authority (AMLA) to “boost the efficient functioning of the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CTF) framework of the Union.” According to the European Commission, the AMLA should kick-start in 2021 and begin direct supervision shortly after.
European Parliament member Ernest Urtasun stated:
We are putting an end to the wild west of unregulated crypto, closing major loopholes in the European anti-money laundering rules. The rules won’t apply to P2P transfers where there is no obliged entity….