People familiar with the matter said that the European Union (EU) is approaching an agreement on key legislation to regulate the cryptocurrency industry that will set common rules in 27 member states. France, currently chairing the EU, and the European Parliament are optimistic that they will resolve the remaining issues holding the Markets in CryptoAssets (MiCA) package and reach an agreement this month, according to people. Negotiators are expected to meet on 14 June and 30 June.
Innovations for cryptocurrency regulation in the EU
First introduced in 2020, MiCA will create unified rules in the $17 trillion economy, placing European regulators at the forefront of overseeing cryptocurrencies. Addressing issues such as investor protection and crypto’s impact on financial stability took on more urgency after the collapse of the TerraUSD algorithmic stablecoin last month.
Member states and parliament still disagree on some important aspects of MiCA. According to people, the areas of disagreement are: Oversight of the largest crypto-asset service providers or CASPs. Those who asked not to be identified while discussing confidential information said both parties discussed how to limit the use of stablecoins as a payment method, particularly by imposing a ceiling for non-euro-denominated transactions.
Parliament is also pushing to account for the environmental impact of cryptoassets in legislation, according to the public. Bitcoin mining relies on using large computing power to process transactions, which consumes a large amount of energy.
Crypto regulations accelerating to combat money laundering
According to people, the French presidency is willing to accept the European Commission’s proposal to disclose the energy consumption of CASPs. Members of parliament also want the EU executive branch to produce technical standards for such disclosures, along with a review clause. Member states and parliament are also clashing over the inclusion of anti-money laundering clauses in the MiCA package.
According to people, national governments think there is a separate set of rules for this, while lawmakers want to create a list of CASPs that do not comply with anti-money laundering rules. People said that the French presidency is ready to consider such a list to make a deal, but with a different configuration than the one proposed.
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