The EU’s new crypto legislation

Context: The Markets in Crypto Assets (MiCA) regulation has been passed by the European Parliament, marking a significant step in bringing the largely unregulated cryptocurrency markets under government regulation.

More on news:

The MiCA will be the world’s first comprehensive set of rules for crypto assets and will apply to the 27-country block European Union. After receiving formal approval by member states, the regulation will come into effect, marking a crucial development in the evolution of cryptocurrency markets.

Coverage under MiCA

  • The MiCA legislation has a broad definition of “cryptoassets,” encompassing digital representations of value or rights that use cryptography for security and can be transferred and stored electronically via distributed ledger technology or similar tech. 
  • This definition includes both traditional cryptocurrencies like Bitcoin and Ethereum and newer ones such as stablecoins. 
  • However, MiCA will not regulate cryptoassets that are classified as transferable securities, function like shares or their equivalent, or are already considered financial instruments under existing regulations. Additionally, non-fungible tokens (NFTs) will largely be excluded from MiCA’s scope. 
  • The legislation will also not regulate central bank digital currencies issued by the European Central Bank or digital assets issued by national central banks of EU member countries acting in their capacity as monetary authorities, nor will it regulate cryptoassets-related services offered by them.

UPSC Prelims 2016

With reference to ‘Bitcoins’, sometimes seen in the news, which of the following statements is/are correct?

1. Bitcoins are tracked by the Central Banks of the countries.

2. Anyone with a Bitcoin address can send and receive Bitcoins from anyone else with a Bitcoin address. 3. Online payments can be sent without either side knowing the identity of the other.

Select the correct answer using the code given below.

(a) 1 and 2 only

(b) 2 and 3 only

(c) 3 only

(d) 1, 2 and 3

Ans. (b)


Prelims Practice MCQ:

Which of the following statements best describes the term ‘MiCA’, which is often seen in news?

(a) world’s first comprehensive set of rules for crypto assets by European Union.

(b) G20 guidelines for global industries to achieve the target of net zero carbon by 2030.

(c) aims to provide set of harmonized rules for trade in biodiversity species.

(d) UN framework to address the social, economic, and environmental challenges faced by least developed countries.

Ans. (a)

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