Binance’s Changpeng Zhao led a chorus of crypto cognoscenti that welcomed the European Union’s crypto regulation with open arms after the bloc’s Markets in Crypto Assets (MiCA) regulation passed its final parliamentary hurdle this week.
While the regulation awaits formal approval from the 27 member states, crypto leaders from Zhao to Gemini’s Tyler Winklevoss and even former Securities and Exchange Chairman Jay Clayton celebrated the news.
In sharp contrast to the U.S. and its scattershot regulatory environment, firms offering digital asset services now have more clarity under the new EU rules. Any company with a license in one EU member state can legally access the whole EU market. Traditional finance players can now choose licensed partners to work with when developing their crypto solutions.
Crypto exchange bosses rejoice
The final vote means “one of the world’s largest markets is introducing tailored regulations for crypto to protect users and support innovation,” Binance’s CZ said on Twitter, adding that his firm views this as “a pragmatic solution to the challenges we collectively face.”
MiCA sets out clear rules for crypto exchanges to operate in the EU and, according to Zhao, Binance is “ready to make adjustments to our business over the next 12-18 months to be in a position of full compliance.”
In the U.S., Zhao and Binance are facing a civil suit from the Commodities and Futures Exchange Commission. The regulator alleges the exchange and its chief executive officer violated federal laws and did not register the exchange in the country.
Last week, CZ argued that regulation by enforcement is bad, and former SEC chairman Jay Clayton echoed those sentiments on CNBC’s Squawk Box on Friday.
“Europe is trying to figure out how to bring crypto into the financial system, whereas the U.S. policy is on keeping it out of the system,” said Clayton, who is now a senior policy advisor at law firm Sullivan & Cromwell.
Coinbase chimes in
Coinbase Chief Executive Officer Brian Armstrong retweeted the official stance of his exchange, which called the rules “a pivotal moment for crypto regulation.”
“This comprehensive framework will give crypto organizations the confidence to invest and grow in the region,” the Coinbase tweet said.
CZ and Armstrong weren’t alone in speaking out in favor of the regulation. Gemini’s Tyler Winklevoss shared a similar sentiment on Twitter.
“While U.S. regulators have been busy infighting and refusing to provide the most basic of clarity for the crypto industry, the European Union just approved the MiCA regulation, which provides a comprehensive regulatory framework for crypto in Europe,” Winklevoss tweeted.
The Gemini founder added, “It’s sad to see the U.S. being left behind on such an important technology and its promise.”
What comes next, ‘MiCA II’?
Though the legislation’s meant to provide consistent, crypto-specific rules across EU member countries, decentralized finance, NFTs, and crypto lending and borrowing aren’t directly addressed by the bill. That prompted discussion of a ‘MiCA II’ well before the first MiCA became law, though consideration remains early going.
“There’s a lot of talk about a MiCA “two,” not from the European Commission, and it’s ultimately for the European Commission to present a MiCA “two” if and when that is necessary,” Peter Kerstens, a financial technology policy adviser to the commission, told The Block last month.
Kerstens cited the 18-month rulemaking process that will follow MiCA before it is fully in force and the number of developments that could happen in an industry known for rapid change.
“So we will see in 18 months’ time, but we will meet that requirement, and that will be accompanied by proposals if we believe there’s something to propose. So then you have a MiCA’ two,'” Kerstens said.
So, MiCA “one” asks the commission to report in 18 months’ time on three issues: NFTs, DeFi, and crypto lending/borrowing. And we will do that. What we will be reporting [with regards to those] it’s too early to say: 18 months is a long time in the crypto space. So we will see in 18 months’ time, but we will meet that requirement, and that will be accompanied by proposals if we believe there’s something to propose. So then you have a MiCA “two.”
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