EU's MiCA Legislation Sets Stage for Unified Crypto Regulation as US SEC Targets Binance and Coinbase

EU’s MiCA Legislation Sets Stage for Unified Crypto Regulation as US SEC Targets Binance and Coinbase

Updated: 10 June 2023

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The publication of the European Union’s Markets in Crypto-Assets (MiCA) legislation in the Official Journal of the European Union (OJEU) on June 9 has been set in motion. The countdown for its implementation starts on Dec. 30, 2024.

MiCA Legislation Signals EU’s Unified Approach to Crypto Regulation

After regulators introduced the regulations in 2021, these regulations became part of the law on May 31. Their goal is to implement a regulatory framework for crypto assets among member states of the European Union.

Although the official enforcement of the rules begins within 20 days of their publication, they will actually start to apply on Dec 30, 2024. However, certain parts of the legislation will come into effect earlier, specifically on June 30, 2024.

The introduction of this legislation has been praised by cryptocurrency service providers and advocates. They claim these regulations create a unified market environment throughout Europe in terms of regulatory requirements and operational procedures.

The MiCA legislation includes crucial provisions that require registration and authorization from issuers of cryptocurrencies, exchanges, and wallet providers.

Moreover, stablecoin issuers must adhere to specific security and risk mitigation measures, while cryptocurrency custody services must ensure robust security and safety protocols to mitigate potential cybersecurity and operational risks.

Additionally, the legislation establishes a framework to prevent market abuse, insider trading, and manipulative behavior within the cryptocurrency industry.

Meanwhile, in the United States, crypto markets and operators are facing mounting pressure as the Securities and Exchange Commission takes regulatory action against prominent crypto exchanges Binance and Coinbase.

Both exchanges are currently facing lawsuits that allege multiple violations, including failure to register as licensed brokers and offering unregistered securities.

EU Introduces Clear Crypto Framework as US SEC Targets Binance and Coinbase

While the U.S. Securities and Exchange Commission (SEC) takes action against major crypto exchanges Binance and Coinbase, officials in the European Union (EU) have introduced a new crypto framework that promises clearer rules for blockchain developers.

Businesses seeking growth and risk management are turning to the EU due to uncertainties in the US, which benefits the EU’s competitiveness, according to Joachim Schwerin, a principal economist in the European Commission.

The SEC’s recent lawsuits against Binance and Coinbase assert that the platforms should have registered for offering trading, clearing, and brokerage services for native tokens like Solana (SOL), Cardano (ADA), and Polygon (MATIC), deeming them securities under existing financial laws. Binance’s U.S. arm dismisses the claims as baseless, while Coinbase’s Chief Legal Officer Paul Grewal highlights the damage caused to US competitiveness.

The EU’s approach involves implementing a customized regulatory regime through MiCA that aligns better with the nature of crypto assets. Lawmaker Ondřej Kovařík, who played a key role in negotiating MiCA, suggests that this eliminates the uncertain enforcement seen in the U.S. and presents an opportunity for Europe.

Kovařík has heard businesses considering a shift to Europe due to the new framework provided by MiCA. However, he emphasizes the importance of smart implementation for the law’s success. The national and European regulatory agencies will determine the exact workings of the regulations in the next 12-18 months, and the successful application will be crucial in maintaining the positive trend.

France, which already has a good crypto licensing regime, welcomes US companies seeking refuge. Meanwhile, US lawmaker Patrick McHenry from North Carolina recognizes Europe’s success in legislating for crypto and suggests it should concern Americans due to the potential boost in development.