The European Council has adopted a pair of new laws protecting the assets crypto traders throughout the bloc and cracking down on money laundering. File Photo by John Angelillo/UPI | License Photo
May 16 (UPI) -- The European Council on Tuesday formally adopted a pair of rules designed to regulate the cryptocurrency market.
The council announced it adopted updated regulations, formalizing the Markets in Crypto-Assets law, or MiCA, which introduces a "harmonized regulatory framework" in the bloc for the first time, the commission said.
"This package bridges a gap in existing EU legislation by ensuring that the current legal framework does not pose obstacles to the use of new digital financial instruments and, at the same time, ensures such new technologies and products fall within the scope of financial regulation and operational risk management of firms active in the EU," the council said.
The law, agreed upon in June, requires that issuers of so-called "stablecoins" keep up a sufficient liquid reserve with a one-to-one ratio partially in the form of deposits to ensure they can accommodate user withdrawals.
Last year, the crypto-trading platform FTX collapsed when it was revealed the company did not have enough assets to match investments.
"I am very pleased that today we are delivering on our promise to start regulating the crypto-assets sector," Swedish Minister for Finance Elisabeth Svantesson said Tuesday. "Recent events have confirmed the urgent need for imposing rules which will better protect Europeans who have invested in these assets, and prevent the misuse of crypto industry for the purposes of money laundering and financing of terrorism."
The council also adopted a law aimed at combatting money laundering that would make transactions with cryptocurrencies traceable by requiring crypto asset providers to keep information on the sender and beneficiary of all transactions regardless of size and keep information accessible to regulators.
"Today's decision is bad news for those who have misused crypto-assets for their illegal activities, to circumvent EU sanctions or to finance terrorism and war. Doing so will no longer be possible in Europe without exposure," Svantesson said.