The Economic and Financial Affairs Council of the European Union, composed of finance ministers from all member states, has approved the anticipated legislation for regulating crypto assets (MiCA) after voting on May 16.

Finance ministers from the 27 member states voted in favor of the MiCA bill and proposed amendments to several legislations and guidelines related to the new legislation.

Two other laws, including the regulation of information accompanying money transfers and certain crypto assets, were also approved by the European Parliament in conjunction with the adoption of MiCA.

The next step in the lengthy process of transforming MiCA into law in the European Union requires the publication of the draft in the Official Journal of the European Union. MiCA laws will come into effect within one year, meaning that the legislation will become law by mid-2024.

The European Commission initially proposed MiCA in September 2020, but it faced numerous obstacles and delays during its legislative process.

The legislation has generally been welcomed by cryptocurrency service providers and advocates as it creates a single market environment in Europe in terms of regulatory requirements and operational procedures.

MiCA components include registration and licensing requirements for crypto asset issuers, exchange platforms, and wallet providers. Stablecoin issuers must meet certain security requirements, and the legislation also encompasses a framework to prevent market abuse, insider trading, and manipulative behavior in the crypto asset field.

Cryptocurrency custodial service providers must ensure sufficient security and safety measures to deal with cybersecurity risks and potential operational errors.

The legislation aims to enhance transparency and security in the cryptocurrency market, providing a unified and reliable legal environment for companies and investors throughout the European Union.

In doing so, the European Union hopes to boost confidence in cryptocurrencies and provide clear rules for companies operating in this sector, paving the way for greater growth and broader adoption of innovative financial technology in the future.