It’s happening!

MiCA, the landmark new crypto rules, were signed off on Tuesday by European Union finance ministers.

(Bear with me, this is more exciting than it sounds).

The EU’s Council, who represent 27 member states, unanimously approved the Markets in Crypto Assets regulation (also known as MiCA).

This means that the EU will be the first major jurisdiction in the world to have crypto licensing in place.

It also agreed new anti-money laundering measures on crypto funds transfers.

Here’s a statement from Elisabeth Svantesson, minister for finance of Sweden, who chaired the talks as Council Presidency:

“I am very pleased that today we are delivering on our promise to start regulating the crypto-assets sector.

Recent events have confirmed the urgent need for imposing rules which will better protect Europeans who have invested in these assets, and prevent the misuse of crypto industry for the purposes of money laundering and financing of terrorism.”

Ambassadors gave a green light to both MiCA and tax measures last week (so this agreement was largely expected) but it’s an exciting development.

What MiCA regulation means for the crypto industry

MiCA requires that…

✔️  Crypto firms, such as wallet providers and exchanges, will need a license to operate across the bloc

✔️ Stablecoin issuers must hold suitable reserves

✔️ It also includes measures to help tackle market manipulation and insider trading

The main features of MiCA were agreed in June, but it’s been subject to administrative hold-ups.

The major provisions will take effect just over a year (after it is published in the bloc’s official journal) which is now likely June or July.

Ministers also agreed on new measures to force crypto providers to disclose details of their customers’ holdings to tax authorities.

This will be shared within the bloc in a bid to avoid stashing funds in secret overseas wallets.

Valdis Dombrovskis, executive vice-president for an Economy that Works for People said:

“Crypto-assets and e-money have great potential to drive economic activity and innovation – but they also carry risks of reducing transparency and enabling tax evasion or fraud.

Updating our tax rules to address these issues will help national administrations to collect tax more efficiently and keep up with evolving technology as Europe moves forward with its digital transition.”

The new tax rules were proposed by the European Commission in December based on a model from the OECD, and the latest draft of the bill was released on Friday. They won’t pass into law just yet as the European Parliament has not given its non-binding opinion on the issue.

What about the UK?

The UK is blasting it’s own path forward on crypto regulation but it looks (at present) to be progressive and pro crypto, as we discussed recently.

Great… more acronyms…more jargon! What does all this mean for investors?

It means peace of mind for one.

For far too long the crypto markets and crypto assets have existed in an undefined, nebulous state. This has made it vulnerable to a small percentage of ‘bad’ (or in some cases foolish) actors who have taken dangerous, often criminal, risks with people’s assets.

This has made it hard for retail investors to know who to trust.

Crypto exchanges have often been raced to offshore locations where they are not subject to same rules and regulations – or system of checks and balances – as ‘traditional’ financial instruments at home.

And that’s where we’re seen runaway horror stories like FTX and Sam Bankman-Fried.

The guardrails simply weren’t there.

The challenge now is that the worlds largest economy, the USA, is still dragging its heels.

The greatest show on earth is unfolding and their regulators have blinkers super-glued onto their eyelids.

However, developments like MiCA will help to set a precedent.

The US won’t want to leave money on the table or risk further ‘brain drain’ of its finest tech talent… so this could well be the shock that is needed to jolt them into action.

Better infrastructure and clearer guardrails is a green light for investment

Having a more level playing field, in terms of rules and codes of conduct, sets a clear path for increased institutional investment.

This is fantastic news for retail investors.

The retail market (you and I) buying crypto is huge but…

The real money will come when the major investment banks and hedge funds join the party.

So far, in the absence of clear regulation, they’ve dipped their toe in to the tune of billions.

These are entities which, in some cases, control TRILLIONS of dollars.

A couple of major buys would send prices skyrocketing.

If you’re a member of the Academy great news! You are already primed and ready for when this happens.

If not, don’t worry!

There is still time.