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EU Parliament approves MiCA, but a global framework for crypto regulation is unlikely in the near future - Albert Isola
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(Kitco News) - The European Union has moved one step closer to establishing a comprehensive framework for regulating cryptocurrencies as the European Parliament has conducted its final vote on the Markets in Crypto-Assets Act, also known as MiCA.
The bill's passage comes after two consecutive delays and extended debates about the finer points of the bill, which looks to create a licensing regime for digital asset service providers in the EU. The bill passed with 517 voting in favor, while 38 members of parliament voted against it.
Next up, the European Council will review the bill and vote on its approval in order for MiCA to become effective regulation. Once passed, it will still take some time for the policies laid out in the bill to take effect. Provisions related to stablecoins will come into force in July 2024, while many of the other provisions won’t take effect until January 2025.
To get a better understanding of how MiCA will affect the various countries of the EU, Kitco Crypto had a conversation with Albert Isola, Minister for Digital and Financial Services at HM Government of Gibraltar.
When asked what effect MiCA will have on the broader EU zone, Isola started off by highlighting the fact that the effects “will not come into play overnight. In order to create effective frameworks, transitional testing will be required.”
“Nevertheless, introducing new crypto-specific laws will allow for greater transparency, better protection for retail investors, and, in general, a far more stable and secure market,” he said. “I suspect more broadly across the EU we will see an increase in economic activity.”
Multiple “global crypto players” have already expressed interest in becoming licensed and approved to operate in the EU, he said, but the region needs to make sure that it doesn’t overregulate the sector and stifle innovation.
For this reason, Gibraltar has taken a more balanced approach “between the need to protect consumers and the jurisdiction with the need to innovate and inspire entrepreneurship,” Isola said. “Our principles-based, risk-based approach allows participants to respond quickest to the latest developments in the industry, while still providing enough oversight to ensure everything remains safe and secure.”
Gibraltar has been one of the more open jurisdictions to the blockchain industry, introducing the first regulatory framework for digital ledger technology (DLT) in 2018. Due to its industry-leading effort to regulate the industry, MiCA “will not necessarily affect Gibraltar directly,” he said. “Indirectly, a framework governing such a large market should have an impact on the industry generally when it comes into effect in late 2024.”
When it comes to the creation of a global cryptocurrency regulatory framework, Isola said that MiCA is “another step” in that direction, and the topic is high on the G20’s agenda, “but this will not happen overnight either.”
“We all acknowledge that the creation of robust legislation does not happen in a vacuum, so collaboration will undoubtedly need to take place in appropriate forums,” he said. “There is a difference however in having one standard, global framework as compared to a global market having distinctly nuanced but common underlying standards. I do not believe the former is likely in the near future. When the latter will come to fruition, only time will tell.”
Isola noted that the fallout from the bankruptcy of FTX has highlighted the need to establish a global regulatory framework for the blockchain industry to help minimize the associated risks. “Thorough, global regulatory standards is the answer and by far the best way to restore people’s confidence in the sector in the wake of the FTX scandal.”
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Transitioning the conversation to another popular topic in the world of crypto – central bank digital currencies (CBDCs) – Isola said that Gibraltar has no specific plans for a CBDC at the present time.
“It remains to be seen whether there is public demand for a digital alternative to cash, but we will continue to monitor this closely,” he said. “Cash will remain in place for the near future and any digital alternative will run in parallel.”
For now, the region’s government is content to track the progress of CBDC projects in neighboring jurisdictions, including the digital euro across Europe and the digital pound in the U.K., as well as the hundred-plus other CBDC projects currently in development across the globe.
In closing, Isola reiterated Gibraltar’s dedication to helping advance the adoption of blockchain technology on a global scale.
“Gibraltar has led the way in establishing standards of market integrity following the work of the Market Integrity Working Group and the introduction of the tenth regulatory principle in April 2022,” he said. “Since then, the jurisdiction has maintained a long-standing record of providing innovative, reliable, and compliant regulatory support to DLT firms. Gibraltar is at the very forefront of regulatory compliance and market integrity on the global stage.”
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