LONDON, July 1 (Reuters - Cryptocurrency companies will need
a licence and customer safeguards to issue and sell digital
tokens in the European Union under groundbreaking new rules
agreed by the bloc to tame a volatile "Wild West" market.
Globally, crypto assets are largely unregulated, with
national operators in the EU only required to show controls for
combating money laundering.
Representatives from the European Parliament and EU states
thrashed out a deal late on Thursday on its Markets in
Crypto-assets (MiCA) law.
"Today we put order in the Wild West of crypto assets and
set clear rules for a harmonised market," said Stefan Berger, a
German centre-right lawmaker who led negotiations.
"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," Berger said.
Crypto markets have tumbled this year as investors worried
about rising interest rates, leading to the collapse of the
terraUSD stablecoin and the freezing of withdrawals and
transfers by major crypto firms Celsius Network and Voyager
Bitcoin, the biggest token, has slumped some 70% since its
November record of $69,000, dragging down the overall market.
The landmark regulation confirms the EU's role as a
standard-setter for digital issues, EU states said.
"Crypto-asset service providers will have to respect strong
requirements to protect consumers' wallets and become liable in
case they lose investors' crypto-assets," they added.
The new law will need formal rubberstamping by the European
Parliament and EU states to become law, followed by an
It gives issuers of crypto assets and providers of related
services a "passport" to serve clients across the EU from a
Holders of stablecoins - a type of crypto designed to hold a
steady value - will be offered a claim at any time and free of
charge by the issuer, with all stablecoins supervised by the
bloc's banking watchdog.
Robert Kopitsch, secretary general of the Blockchain for
Europe lobby group that includes the major exchanges Binance and
Crypto.com, said the rules were "a mixed bag" adding the group
feared "that stablecoins will basically have no ways to be
However, Coinbase Global Inc, a major global crypto
exchange, said in a blog on Friday the comprehensive new
framework was "exciting," providing regulatory certainty to the
market, and raising industry standards.
"A harmonized single set of rules for the entire EU will
enable us to invest, accelerate, and scale our growth efforts
across the entire bloc."
AFME, a financial markets industry body, said the rules
would reduce fragmentation and underpin the development of a
robust and well-functioning market.
More clarity is needed, however, to ensure that custodians
of crypto assets are only on the hook in cases of negligence or
misconduct, and not for events beyond their control, such as a
nation state hack, AFME said.
Many states have long opposed including non-fungible tokens
(NFTs), digital assets representing objects from art to videos.
But under pressure from EU lawmakers, Thursday's compromise
foresees that NFTs will be excluded "except if they fall under
existing crypto-asset categories".
Brussels will assess within 18 months whether standalone
rules are needed for NFTs.
National regulators will be responsible for licensing crypto
firms, but they will have to keep the EU's securities watchdog
ESMA informed about large operators.
ESMA will develop standards for crypto companies to disclose
information on their environmental and climate footprint.
The United States and Britain, two major crypto centres,
have yet to approve similar rules.
Circle, the company behind the major USD Coin stablecoin
called the rules "a significant milestone."
"While no comprehensive body of rules is perfect ... it
nonetheless provides practical solutions to issues that other
jurisdictions are just beginning to grapple with," it wrote in a
(Additional reporting by Francesco Guarascio in Brussels and
John O'Donnell in Frankfurt
Editing by Mark Potter, Jonathan Oatis, Gareth Jones, Paul Simao
and David Gregorio)