The Committee on Economic and Monetary Affairs´ vote to enter trilogue negotiations before the 1st reading in EU Parliament on the Proposal for Regulation of the European Parliament and of the Council on Markets in Crypto Assetc (MiCA) has been endorsed by Parliament. Now, trilogue negotiations between the three main insitutions of the EU, the EU Commission, Parliament and Council of Ministers, are beginning.
The EU Commission published its proposal for a Regulation on Markets in Crypto-Assets in September 2020. The EU Parliaments´s competent Committee on Economic and Monetary Affairs appointed Stefan Berger as rapporteur to this file. He presented his draft rapport in February 2021. It took one more year until the final report was tabled for the EU Parliament plenary this March. The Committee eventually decided to enter into the interinstitutional negotiations before the first reading in Parliament (so-called trilogue) and the decision was endorsed by Parliament on April 4.
Some highlights from the report summary:
- No person should offer crypto-assets in the EU unless that person
- is a legal entity established in the Union, a natural person having its residence in the Union, or an entity established or having a seat in the Union and subject to the rights and obligations of the Union, or is a decentralised autonomous organisation;
- has drafted a crypto-asset white paper in respect of those crypto-assets;
- has received authorisation from a competent authority;
- has measures in place to prevent the misuse of the offering of crypto-assets to the public or trading on a platform for crypto-assets for the purposes of money laundering or financing of terrorism;
- does not have a parent undertaking, or a subsidiary, that is established in a third country that: (i) is listed as a high-risk third country having strategic deficiencies in its regime on anti-money laundering and counter terrorist financing; (ii) has a 0 % corporate tax rate or no taxes on companies’ profits.
- New provisions stipulate that crypto asset service providers should:
- act in an honest, fair and professional manner, in the best interests of their clients and potential clients;
- make publicly available, in a prominent place on their website, information related to the environmental and climate-related impact of each crypto-asset in relation to which they offer services;
- have effective internal control mechanisms and procedures to ensure full traceability of all transfers of crypto-assets for payment purposes within the EU, as well as transfers of crypto-assets from the EU to other regions or from other regions to the EU;
- have effective internal controls and procedures for the prevention, detection and investigation of money laundering, terrorist financing and other criminal activities in accordance with the [Money Laundering Regulation];
- apply adequate customer due diligence procedures by identifying and verifying client identity on the basis of documents, data or information obtained from a reliable and independent source and by identifying the identity of the beneficial owner and taking reasonable measures to verify that person’s identity. Internal control mechanisms and procedures should provide for enhanced due diligence measures for customers that wish to transfer crypto-assets to or from unhosted wallets;
- investigate all complaints fairly and within three working days of receiving a complaint.
- Crypto-asset service providers carrying out specified services should have in place a plan that is appropriate to support an orderly wind-down of their activities under applicable national law, including the continuity or recovery of any critical activities performed by those service providers or by any third party entities.
- By 1 January 2025, the Commission should include crypto-asset mining in the economic activities that contribute substantially to climate change mitigation in the EU Sustainable Finance Taxonomy.
- ESMA should be conferred sufficient powers to supervise the issuance of crypto-assets, including asset-referenced tokens, as well as crypto-asset service providers, including the power to suspend or prohibit an issuance of crypto-assets or the provision of a crypto-asset service and to investigate infringements of the rules on market abuse. It should monitor and report annually on the scale and severity of any circumvention of this Regulation by third-country actors, as well as propose possible countermeasures.
The EU Parliament is taking a clear stand with focus on consumer protection and environmental responsability. ESMA shall be the empowered watchdog for crypto-assets in the EU. Regulation is underway, anyway.
