EU to Vote on MiCA in April
- The EU Parliament will cast its final vote on the MiCA legislation on April 19, 2023.
- If approved, MiCA regulation will establish a licensing regime for crypto across the EU and introduce reserve requirements for stablecoins.
- The European Banking Authority (EBA) is hiring crypto-skilled staff to prepare for its duties under MiCA.
The European Union is set to formalize the Markets in Crypto Assets Regulation (MiCA) to establish a licensing regime for cryptocurrencies across the bloc. The MiCA debate will take place on April 18 in the European Parliament, with a final vote expected the following day.
The MiCA legislation has received widespread support, with members of the Parliament’s Economic and Monetary Affairs Committee voting 28–1 in favor of the law in October last year.
Transfer of Crypto Funds
Alongside MiCA, the European Parliament will also discuss the Transfer of Funds regulation, which aligns with FATF Travel Rule requirements. This regulation was provisionally agreed upon in June 2022, and its final approval is expected shortly after MiCA.
If the EU implements the Transfer of Funds regulation, it will require Virtual Asset Service Providers (VASPs) to verify their users’ identities and exchange their data with counterparty VASPs during crypto transactions.
VASPs will have three options to comply with this mandate:
(i) Obtain and exchange user data manually with their counterparty VASPs.
(ii) Opt for an automated Travel Rule Solution that stores their user data on third-party or their own servers.
(iii) Choose an automated Travel Rule Solution that enables VASPs to exchange user data in a Peer-to-Peer exchange mode.
The first two cases will impact the user experience and privacy, making users leave the platform altogether in search of a VASP that cares about them. So, what should VASPs do?
Of course, choose a Travel Rule Solution of the third kind, as it can help them comply with FATF requirements while preserving user privacy. We have an ideal solution to suggest — Shyft Veriscope. Click here to learn about it.
What if MiCA is Approved?
If approved, crypto companies will have to mandatorily meet governance and consumer-protection norms, as prescribed under MiCA. On a positive note for VASPs, the MiCA legislation is expected to take effect one to three years after its approval, giving them some time to prepare.
EU legislators believe introducing a cryptocurrency licensing regime is a significant step forward for the EU. It will enable them to regulate the rapidly evolving crypto market while ensuring consumer protection and market stability.
In this challenging regulatory climate, Shyft Network has made protecting the user experience and privacy its core objective and urges regulators and industry stakeholders to work towards regulations that act in the users’ interest.
Working on the Successful Implementation of MiCA
The European Banking Authority (EBA) is also ramping up preparations for the forthcoming MiCA regulation by hiring staff with expertise in crypto. As per a recently published vacancy notice, the Paris-based agency seeks someone with a deep understanding of crypto-asset products and services and several years of experience supervising financial institutions.
Recently, the Paris Blockchain Week 2023 saw discussions on the implications and potential impacts of the forthcoming MiCA regulation. Gundars Ostrovskis, who was involved in developing the MiCA documentation, insisted it would benefit companies and users by providing regulatory certainty and market integrity.
While the efficacy of MiCA remains a hot topic of debate among crypto enthusiasts, it is important to note that the proposal has yet to receive approval from the European Parliament. The outcome of the EU legislators’ decision on MiCA will be revealed on April 18th.
And even if it receives approval, the impact on the crypto ecosystem — whether positive or negative — will only be evident with time. As such, regulators and industry stakeholders must prioritize user experience and privacy when crafting regulatory frameworks for the cryptocurrency sector.
In doing so, they can safeguard users from potential harm while promoting transparency and trustworthiness within the industry.
Shyft Network powers trust on the blockchain and economies of trust. It is a public protocol designed to drive data discoverability and compliance into blockchain while preserving privacy and sovereignty. SHFT is its native token and fuel of the network.
Shyft Network facilitates the transfer of verifiable data between centralized and decentralized ecosystems. It sets the highest crypto compliance standard and provides the only frictionless Crypto Travel Rule compliance solution on the blockchain while protecting user data.
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