The “wild west” for crypto is over (in the EU at least)
Much like “the taming of the west” hung over events through the iconic TV series, Deadwood, and all the characters were effectively counting down the days, so too has the crypto industry understood that proper and strict regulation was inevitable. The EU has taken a leadership position on this with a host of regulations that will, perhaps, pave the way for all other major markets.
The EU has passed the MiCA law, and this will come into effect by the end of 2023. The MiCA law contains measures that will guard the market against abuse and manipulation and, furthermore, will require that crypto firms disclose their environmental impact, to help encourage the notoriously polluting sector to “clean up.”
“Today, we put order in the wild west of crypto assets and set clear rules for a harmonised market,” Stefan Berger, the German MEP who led negotiations on the policy, said (as reported by The Guardian).
“The recent fall in the value of digital currencies shows us how highly risky and speculative they are and that it is fundamental to act.”
The MiCA law will work by giving the issuers of crypto assets and services a “passport” that will serve clients across the EU from a single base. The provision of this passport comes with a range of capital and consumer protection rules, meaning that platforms will have as difficult of a time operating below the same standards that the EU holds banks and other financial institutions to.
Unfortunately for consumers, the MiCA law does not cover NFTs, where some of the more egregious scams and consumer manipulation occurs.
It will be interesting to see if the UK and US – the two major markets for essentially unregulated crypto currently, will take MiCA as a benchmark, and whether this move by the EU will help to steady the incredibly volatile crypto market.