European Union set to tame ‘Wild West’ crypto markets

The European Union reached a provisional deal on the world’s first set of comprehensive rules to regulate the crypto market.

According to a Reuters report, Cryptocurrency companies will need a licence and customer safeguards to issue and sell digital tokens in the European Union under new rules to tame the volatile “Wild West” crypto market.

Representatives from the European Parliament and EU states thrashed out a deal late on Thursday on its Markets in Crypto-assets (MiCA) law.

“Today we put order in the Wild West of crypto assets and set clear rules for a harmonised market,” said Stefan Berger, a German centre-right lawmaker who led negotiations.

“The recent fall in the value of digital currencies shows us how highly risky and speculative they are and that it is fundamental to act,” Berger said.

What are the new rules?

• Crypto firms that want to issue and sell digital tokens in an EU state will have to obtain a licence from a national regulator.
• The licence will allow operators to serve the whole 27-country bloc from one base, and be liable for losing crypto assets from consumers’ digital wallets.
• National watchdogs must update the EU’s securities watchdog ESMA about any large operators they have authorised, which stops short of lawmaker calls for a European watchdog for the sector.

Currently, crypto assets are largely unregulated globally, with national operators in the EU only required to show controls for combating money laundering.

Crypto firms that already comply with anti-money laundering controls will also be given 18 months to obtain licences under new law, without disrupting service.

The new law will need formal agreed by the European Parliament and EU states to become law, followed by an implementation period.