Everyone who invests in cryptocurrencies and follows the cryptocurrency market will be interested in the content of the deals that were worked out a few days ago at the EU level. The Council presidency and the European Parliament reached the preliminary agreement on the so-called Transfer of Funds Regulation (TFR) and the Markets in Crypto Assets (MICA).

What are the most important changes?

  • The ESMA and EBA will acquire intervention powers to ban or restrict the provision of cryptocurrency-related services or the marketing, distribution, or sale of cryptocurrencies.
  • The EBA will become the sole EU supervisor for the largest stablecoin.
  • Supervision of CASP entities will remain at the national level, but ESMA will play a significant coordination role for the largest CASP entities.
  • ESMA will establish a register of non-compliant entities or those operating in the EU without authorization. Authorities will have strong power over listed entities.
  • ESMA will develop a RTS for defining sustainability methodologies and indicators, and issuers and exchanges will have to disclose the climate and environmental impacts of issuing crypto assets.
  • CASP entities will be subject to robust AML safeguards, among other things, they will have to be headquartered and have substantive management in EU countries, as well as have a resident director and registered office in a member state.
  • Stablecoins will be subject to the strictest rules. They will have to maintain reserves to cover any claims and provide holders with a permanent right of redemption. The reserves will become protected in case of insolvency.
  • Exchanges will be liable for damages or losses incurred by customers due to intrusions or operational failures that they could have prevented.
  • Crypto assets will be protected in case of exchange insolvency.
  • To prevent market abuse, there will be clear regulations on the disclosure of inside information and prohibitions on insider trading and market manipulation.
  • It will be mandatory for consumers to be informed about the risk of loss of cryptocurrency investments.
  • DeFI and cryptocurrency loans will not be regulated.
  • Almost all NFT transactions will remain outside the scope, but regulators will be able to reclassify them on a case-by-case basis based on actual uses.