New EU Crypto Law: Will the Industry Adapt to Stricter Regulations?

New EU legislation aims to curb scams and cryptocurrency market turbulence, as Bitcoinbut many major players do not yet comply.

THE historic regulation, in force this week, allows exchanges and wallet providers to apply for licenses to operate across the bloc. Although Brussels claims to be the first to establish suitable crypto rules, compliance remains low.

Stricter regulations and the industry’s response

The new European crypto regulation, MiCA, was adopted in June 2023. French Finance Minister Bruno Le Maire welcomed the legislation, saying it “will prevent the misuse of crypto-assets while being supportive to innovation to maintain the attractiveness of the EU”.

German lawmaker Stefan Berger added that these rules place the EU at the forefront of the global symbolic economy. Despite this, the mood in the sector is tense as financial rules loom.

Faustine Fleuret, president of French crypto lobby group ADAN, called the period “difficult and uncomfortable,” citing strict and unclear standards.

Marina Markezic, founder of the European Crypto Initiative, pointed out that many crypto companies have yet to inform their customers of the implications of the law. Binance announced that it would restrict access to unauthorized coins once MiCA is implemented, but others lack clarity.

Implementation challenges and future prospects

A significant part of MiCA focuses on stablecoins, crypto assets linked to other assets like gold or the US dollar. These rules, which will come into effect first, present challenges such as whether managing stablecoins requires registration as a payment provider.

“Less than two weeks before a big, big piece of the MiCA regulation came into effect, the people who have to comply didn’t even have all the operational details they needed to become compliant,” she declared.

As of now, no major crypto players have confirmed their approval under MiCA. Paolo Ardoino, CEO of stablecoin issuer Tether, and Circle, which applied for a MiCA license last year, have yet to obtain regulatory approval.

Both Markezic and Fleuret see positives in MiCA, including providing a clear framework for crypto businesses to operate across Europe. Fleuret, however, expressed concern that the law might not be proportionate for smaller players.

Impact on industry

The creation of MiCA was partly motivated by fears that big tech companies like Facebook would issue their own currencies, as evidenced by the abandoned Libra project.

Recent collapses, like that of the Terra stablecoin, have further reinforced the need for strict regulations. MiCA imposes reserve requirements on euro-based stablecoins and limits on daily transactions, calling existing provisions into question.

The cryptocurrency industry has faced significant challenges, and figures such as Sam Bankman-Fried and Changpeng Zhao have faced legal consequences.

Despite these setbacks, Markezic believes that legal credibility could usher in a new era for crypto. Established providers such as banks expected clear regulations that would make the use of technology widespread.

Markezic optimistically said: “I think we will talk less about technology and less about stablecoins and… more about utility and what it can bring to the consumer. » However, she recognized that the road ahead was strewn with pitfalls.

“Many businesses will not have the capacity to comply,” she said. “Very small startups and innovative companies will likely limit their activities in the EU. »

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