06 Oct 2022 · 1 min read

European Council Passes MiCA Crypto Regulation – A Turning Point for Crypto Landscape

The European Council on Wednesday passed the new MiCA crypto regulation, which by many is seen as a turning point for Europe’s crypto industry.

The new bill, with the full name Markets in Crypto-Assets (MiCA), has now been voted through the European Council but still needs to pass an additional vote in the European Parliament next week.

The next step after MiCA has also passed the European Parliament will be to translate the full text into the more than 20 official languages of the EU. The bill includes a 12-18-month adaptation period meant to help companies adjust to the new regulations.

The bill aims to regulate all crypto-related activities, and especially the issuance of cryptocurrencies, that take place within the European Union. Notably, the bill will also bring much more stringent oversight for companies that are defined as so-called crypto-asset service providers (CASPs).

Among the requirements that will be placed on CASPs under the new rules is legal liability for the companies if they lose their clients’ cryptoassets. The rule covers all centralized companies in the crypto space, including wallet providers of ‘hosted’ or custodial wallets, but not so-called ‘unhosted wallets’ otherwise known as crypto wallets where the private keys are controlled by users.

Notably, the new regulations do not include a ban on proof-of-work (PoW) mining, as was originally proposed.

The EU first reached an agreement on MiCA in July this year. Back then, representatives of the crypto industry, such as Rebecca Rettig, a board member at the crypto-friendly bank Silvergate, applauded the effort to “provide clarity in the crypto space” while also noting that there is “more work to be done.”