Interest in the MiCA regulation, which is seen as the main cause of recent cryptocurrency weakness, is growing. Known as the world’s first coin law, MiCA is a comprehensive bill on crypto asset regulation introduced by the European Union (EU) Parliament. Local experts consider laying the groundwork for coin regulation with MiCA as an opportunity. However, some have diagnosed that the parallel relationship with the current Capital Markets Law also needs to be closely examined. On the other hand, important steps are being taken towards cryptocurrencies in the USA. Here are the details…
EU passes key cryptocurrency law
As we have also reported as Kriptokoin.com, on April 20, the EU Parliament finally accepted MiCA with 517 votes in favor and 38 against. Following this adoption, MiCA is expected to be implemented in 27 EU member states by the middle of next year. MiCA’s core principles include legal clarity, promoting innovation and fair competition, protecting consumers and investors, ensuring market integrity, financial stability, and resolving the issue of regulatory systems fragmented by country.
The industry is enthusiastic about the birth of the world’s first coin law and is waiting for the regulatory uncertainty to clear as a barrier to market growth. Previously, the 20 major countries (G20) only discussed global crypto asset regulation but did not establish a specific framework. There is even a possibility that the pioneering MiCA Act will provide specific guidelines for future global crypto-asset regulation.
“Eliminating regulatory uncertainty through MiCA is a green light for the ecosystem in the medium to long term,” said Yu-Ri Oh, head of the policy research team at the Bithumb Institute for Economic Research, who is also a lawyer. He also stated that “MiCA will provide a regulatory direction for countries where regulations regarding crypto assets have not been established, including Korea.” He also added, “It will grow,” predicting it will have a positive impact on the industry.
The “Brussels effect”: What does it mean for cryptocurrencies?
The ‘Brussels effect’, which will affect the crypto asset market, also draws attention. The Brussels effect means that “European rules become global standards in a short time” and expresses a phenomenon where regulations prepared by the EU lead to global regulations. Team Manager Oh said that “unlike the United States, which continues to take legal action against the crypto-asset market without a clear basis, Europe (like MiCA) is showing legislative action” and that “global crypto leadership is likely to change in the future.” “
MiCA also powers the “stablecoin trend”. This is because the investor protection scheme for MiCA’s stablecoin is specifically mentioned. According to MiCA, platform operators must have at least 100 percent stablecoin reserves in preparation for large investor withdrawals. The daily trading volume is limited to 200 million euros. In addition, the European regulatory authority (ESMA) can intervene directly if crypto-asset exchanges fail to adequately protect investors or undermine financial stability.
Attention to stablecoins
Analyst Yoon said, “MiCA stated that at least 100 percent of stablecoin issuance should be secured as safe assets.” said. He interpreted this as a positive sign for the stablecoin market. On the other hand, it was argued that the parallel relationship with the existing Capital Market Law should be examined. It was pointed out that the punishment of current crypto-asset crimes, to which the Capital Markets Law is applied, should not be limited to the enactment of the Virtual Assets Law. Overall, the adoption of the MiCA law is expected to have a significant impact on the global crypto asset market. With the introduction of clear and comprehensive regulations, investors and businesses in the EU will have more confidence in the market and other countries will be able to follow their own similar regulations.
Focusing on investor protection, market integrity and financial stability is a positive development as it will help prevent fraud, fraud and other illegal activities in the crypto-asset space. However, as with any new regulation, there may be challenges and issues that arise as the MiCA Act is implemented. It will be important to closely monitor the impact of regulations on the crypto-asset market and make adjustments as needed to ensure they achieve their intended goals.
In addition, it will be important to consider the parallel relationship between the MiCA Law and existing regulations such as the Capital Markets Law. While the MiCA Law provides a comprehensive framework for crypto-asset regulation, it should not be used as an excuse to ignore past illegal activities. By working with existing regulations, policymakers can ensure effective and fair regulation of the crypto-asset market.
Cryptocurrency draft published in the USA
Meanwhile, Republican lawmakers on the Financial Services Committee of the United States House of Representatives have released a draft bill that focuses on payment stablecoins rather than overseeing other aspects of crypto-asset markets. A senior Republican committee worker involved in drafting the legislation told reporters on April 24 that they are narrowing the scope of a proposed stablecoin bill in September 2022 in response to feedback from lawmakers. Aiming to provide for “regulation of payment stablecoins,” the bill will be separate from legislation that focuses on a study on custody providers, algorithmic stablecoins, and central bank digital currencies.
Under the current draft of the bill, the Fed will largely be responsible for non-bank stablecoin issuers. Issuers will also need to meet certain federal criteria to qualify as a payments stablecoin issuer, even under a state statute. Additionally, the wording of the draft bill no longer includes the two-year ban on algorithmic stablecoins that was first proposed after the launch of TerraUSD Classic (USTC) in September.
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