The European Union (EU) is attempting to present a uniform regulatory framework for cryptocurrencies and blockchain technology through its new Markets in Crypto Assets (MiCA) proposal.
MiCA was proposed in September 2020 and calls for its successful passage have been intensifying given the current rate of fragmentation of regulations in each member state.
Europe's plan is to use MiCA as a regulatory tool that brings together all crypto assets under its roof, and specifically those crypto assets that are not currently covered by existing EU financial laws.
MiCA is intended to supersede national legislation and provide the entire EU with actionable and reliable regulatory solutions.
Some of the key points on which MiCA works are establishing a better transparency, authorization and supervision for financial markets involving anything from mainstream cryptocurrencies to altcoins and crypto securities.
Powering up crypto innovation in the EU
If the passage of MiCA is successful, it will effectively mean that every asset on the blockchain would be subject to its requirements, regardless of the asset's nature or economic function.
Specifically, MiCA wants to establish itself as the guiding regulation in three areas, including e-money tokens, asset-referenced tokens and a third, catch-all crypto assets category for anything that may not have been covered by the previous two.
While some national regulators may grumble at losing power over the blockchain, unified regulation should give companies confidence to invest in Europe because of the regulatory framework and greater certainty.
MiCA will also look into the operations of crypto-asset service providers and help them establish a regulatory-backed operation.
Compliance could reign supreme in the EU should MiCA pass successfully. The proposal is still being debated and far from being finally adopted.