As the European Union (EU) prepares to introduce a digital currency (euro) later in the year, member states have adopted new legislation bordering cryptocurrency and other crypto-assets. According to reports, the purpose of the legislation is to protect investors against abuse and manipulation. The cryptocurrency exchange suffered a great failure in November when the FTX platform and its sister trading house Alameda Research went bankrupt, dissolving a virtual trading business that at one point had a market value of $32 billion.
Mairead McGuinness, EU commissioner for financial services, during a parliamentary debate, noted that if this legislations were in place, perhaps, the collapse may have been prevented.
Some of the legislation includes the following:
(1) Under the regulation known as Markets in Crypto Assets (MiCA), crypto-asset service providers (CASPs) must protect customers’ digital wallets and will be liable if they lose investors’ crypto assets.
(2) So as to deter criminal elements from using crypto assets, such as bitcoin, Ethereum, tokens and NFTs, a second regulation on fund transfers was passed.
The rules will progressively come into force from July 2024 after EU member states formally nod them into law.
