REGULATION

Rapid Growth of European Crypto Venture Capital, Overwhelming Approval of MiCA, Fully Entering Crypto Jurisdiction

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Rapid Growth of European Crypto Venture Capital, Overwhelming Approval of MiCA, Fully Entering Crypto Jurisdiction

The European Parliament has passed the Markets in Crypto Assets (MiCA) comprehensive regulatory framework for digital assets with a vote of 517-38, making the European Union the world's first major jurisdiction to introduce a comprehensive crypto law. Additionally, the "Travel Rule" was approved with 529 votes to 29, requiring cryptocurrency operators to identify their customers to prevent money laundering.

Background: MiCA is expected to be approved for implementation as early as mid-2024.

MiCA to be Implemented by Mid-2024 at the Latest

The European Securities and Markets Authority (ESMA) welcomed the voting results on Twitter and stated that it will announce the timetable for drafting secondary legislation under MiCA in due course. However, consumers are reminded that protections are limited at this stage, and investing in crypto assets remains a risky endeavor.

MiCA will need formal approval from all 27 EU member states to come into effect. Specific requirements will be phased in gradually, for instance, rules governing stablecoins may start to apply from July 2024.

European Crypto Venture Capital Surges, MiCA Serves as Key Protective Measure

According to Bloomberg, crypto venture capital in Europe has significantly increased, accounting for 47.6% in the first quarter of this year excluding the UK's 1.9%, surpassing the U.S. at 30.5%.

European Commissioner for Financial Services, Mairead McGuinness, stated during parliamentary debates:

While the crypto market is still too small to pose systemic risks, we need to put safeguards in place to prevent risks such as the collapse of crypto operators like FTX.

However, crypto lending, DeFi, and NFTs are not within the scope of MiCA this time, prompting calls from figures like ECB President Christine Lagarde for MiCA 2 to be developed.

Binance Will Actively Comply with Compliance Measures

Binance founder CZ also expressed support and emphasized that Binance will make adjustments to its operations to be fully compliant within the next 12-18 months.