The European Union (EU) has confirmed the implementation of the world's first regulatory law to prevent money laundering and other abuses of cryptocurrencies.
The Board, composed of 27 EU countries, announced on the 16th (local time) that it has confirmed the enforcement of the 'Markets in Crypto Assets (MiCA)' law.
It marks the completion of all legislative procedures in about 2 years and 8 months since the Executive Committee proposed the draft in September 2020. The new regulations are set to be phased in from July next year.
MiCA is a comprehensive regulatory bill that includes management and supervision of the volatile cryptocurrency market, consumer protection, and environmental safeguards.
Once the law is implemented, cryptocurrency companies must receive official authorization to operate within the EU, and if investors lose their assets, the company could face legal responsibility.
The EU also plans to disclose a list of companies that do not comply with the law.
In addition, measures have been taken to allow authorities to trace transactions to prevent money laundering using cryptocurrencies. If illegal activity is suspected, transactions could be blocked at the source.
It also mandates the disclosure of energy consumption information by key service providers. Criticisms have been consistently raised that cryptocurrencies emit carbon during mining, causing negative impacts on the environment.
The EU has also decided to devise measures to prevent tax evasion using cryptocurrencies as a follow-up measure to the implementation of MiCA.
EU Economic and Financial Ministers, who met in Brussels, Belgium, agreed to draft a directive (one of the forms of EU legislation) to regulate individuals who misuse cryptocurrencies for tax evasion, according to a press release from the EU.
According to the new directive, cryptocurrency service providers (CASPs) within the EU will have to report all transactions of customers residing in the region, regardless of the size of their business.
The new directive on cryptocurrency taxation is scheduled to be implemented in January 2026, once approved by the European Parliament.
