Lawmakers in the European Parliament have approved the world’s first comprehensive package of rules aimed at regulating the cryptocurrency industry.
In a vote Thursday, the EU Parliament voted 517 in favor and 38 against to pass the Markets in Crypto Act, or MiCA. The legislation, which seeks to reduce risks for consumers buying crypto assets, will mean providers can become liable if they lose investors’ crypto-assets.
The rules will impose a number of requirements on crypto platforms, token issuers and traders around transparency, disclosure, authorization, and supervision of transactions, the EU Parliament said in a statement Thursday.
Platforms will be required to inform consumers about the risks associated with their operations, while sales of new tokens will also come under regulation.
Stablecoins like tether and Circle’s USDC will be required to maintain ample reserves to meet redemption requests in the event of mass withdrawals. Stablecoins that become too large also face being limited to 200 million euros ($220 million) in transactions per day.
The European Securities and Markets Authority, or ESMA, will be given powers to step in and ban or restrict crypto platforms if they are seen to not properly protect investors, or threaten market integrity or financial stability.
MiCA also addresses environmental concerns surrounding crypto, with firms forced to disclose their energy consumption as well as the impact of digital assets on the environment.
Mairead McGuinness, European commissioner for financial services, lauded the law’s approval Thursday and said she expects the rules to start applying “from next year.”
Learn more: CNBC