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The European Union (EU) has taken a major step forward on regulating cryptocurrency, with the European Council approving comprehensive Markets in Crypto-Assets (MiCA) regulation on Oct. 5. The development marks another significant action taken by European authorities to ensure that the crypto market plays by their rules. The bill awaits approval by the European Parliament; a vote is scheduled for Oct. 10.
Once enacted, the bill is likely to have a massive impact on the crypto market because of its broad reach. Among the many realms it addresses are the prevention of money laundering, consumer protection, the accountability of crypto companies, the environmental impact of the industry, and stablecoins.
The controversial MiCA law is sure to spark crypto industry debate. It may also be just the first in a series of changes coming to the global crypto market. The European regulation lays the foundation for what could be a new era in operations for major crypto entities.
The Markets in Crypto-Assets bill is comprehensive regulation that aims to bring the asset class firmly under the supervision of the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA).  
A debate over whether cryptocurrency is a security or a commodity is also addressed in the bill. Under MiCA, cryptocurrencies are divided into four categories: crypto-assets, utility tokens, asset-referenced tokens and electronic money tokens (e-money). Cryptocurrencies will be regulated in accordance with their classification. 
The bill’s broad focus makes it likely to have a powerful influence on the global crypto market. Among the many areas it attempts to oversee are the prevention of money laundering, consumer protection, crypto company accountability, the industry’s environmental impact, and stablecoins, which minimize typical cryptocurrency volatility by maintaining collateral in the form of reserves, often of U.S. dollars.
Stablecoins are a particularly important part of the regulation, and the EBA will be overseeing this aspect. MiCA mandates that stablecoin issuers maintain minimum liquidity to prevent crashes like that of TerraUSD, which was intended to be worth exactly $1, but plunged in value beginning May 9, 2022. It traded at about 3 cents on Oct. 6, 2022.
The reserves of stablecoin issuers also must also be protected from insolvency as a part of the bill. It also calls for “large coins” that are used as a means of payment to be capped at €200 million worth of transactions per day.
Regarding money laundering, MiCA requires the EBA to maintain a record of non-compliant crypto asset service providers. There will also be additional checks in place to ensure that anti-money laundering (AML) rules are adhered to.
The MiCA regulations were proposed in a first provisional draft in June 2022, with some changes and updates being made in following weeks. It does not deal with decentralized finance (DeFi) or non-fungible tokens (NFTs) yet, although officials are likely to tackle regulating these sectors in the future.
While there have been some doubts about some of the details of the EU regulation, the crypto industry has largely welcomed it, as it takes a clear stance on digital assets. Many industry players believe that the European regulation will allow the market to expand because relevant parties understand what the rules of the game are.
While the European Council has passed the regulation, it still requires approval from the European Parliament. This vote is scheduled for Oct. 10. If approved, the regulation is likely to come into effect in 2024. That should give crypto entities plenty of time to adjust to the landmark changes.
MiCA is likely to be passed and authorized in early October 2022. This will be a milestone for the cryptocurrency market, as there has yet not been such an extensive set of regulations in place. Other regions likely will look to this regulation when shaping their own crypto regulatory strategies. In the meantime, crypto companies will have to begin making adjustments that will allow them to continue operating in the EU once the regulations come into effect.
Council of the European Union. "Proposal for a Regulation of the European Parliament and of the Council on Markets in Crypto-Assets, and Amending Directive (EU) 2019/1937."
CoinMarketCap. "TerraClassicUSD."
Council of the European Union. "Proposal for a Regulation of the European Parliament and of the Council on Markets in Crypto-Assets, and Amending Directive (EU) 2019/1937," Page 30. 
Sygna. "MiCA (Updated July 2022): A Guide to the EU's Proposed Markets in Crypto-Assets Regulation."
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