On June 30, the EU reached a political agreement on a set of laws known as the Markets in Crypto Assets Regulation (MiCA). MiCA’s objective is to regulate and harmonize the digital assets market across the European Union (EU) by establishing a consistent regulatory framework for digital asset service providers. MiCA replaces the existing country-specific frameworks for crypto-assets, but does not replace existing EU financial services legislation. MiCA states that for crypto firms to operate within the EU, they must be properly licensed. A single license will allow the firm to operate throughout all EU member states. MiCA also imposes identity checks on transactions, which is a blow to many DeFi proponents.
However, while originally excluded from the scope of MiCA, subsequent amendments proposed that NFT (non-fungible token) trading platforms should also be subject to EU anti-money laundering (AML) laws. It will be interesting to see how this will impact NFT Marketplaces such as OpenSea – the largest NFT Marketplace – and how they will need to assess the risk of illicit finance going through their systems moving forward.
EU regulators determined to leave a broader overhaul of the AML laws impacting banking and other sectors (including other crypto-related activities such as crypto lending) for a later date. Check out more details here and here.