EU looks to reach deal on cryptocurrencies law in June

The new legislation would set common regulations for digital assets across the 27 member states

'Bitcoin sold here' sign in the window of a phone repair store in Antwerp, Belgium. Trading in Bitcoin has remained volatile in recent weeks. Bloomberg

The European Union is nearing an agreement on key legislation to regulate the cryptocurrency sector that would set common rules across the 27 member states.

France, which currently chairs the EU, and the European Parliament are optimistic about resolving remaining issues holding up the Markets in Crypto-Assets (MiCA) package and reaching a deal this month, according to sources.

Negotiators are expected to meet on June 14 and June 30 to discuss the deal.

MiCA, first presented in 2020, will put European regulators at the forefront of supervising cryptocurrencies by creating unified rules across the $17 trillion economy. Addressing issues such as investor protection and crypto’s impact on financial stability has taken on added urgency after last month’s collapse of the TerraUSD algorithmic stablecoin.

Member states and the parliament still disagree on several key aspects of MiCA.

Areas of disagreement include whether to include nonfungible tokens in the new set of rules, how to regulate significant stablecoins and supervision of the largest crypto-asset service providers, or CASPs, according to sources.

Both sides are also discussing how to limit the use of stablecoins as a payment method by introducing a ceiling, in particular for transactions not denominated in euros, sources said.

The parliament is also pushing for factoring in the environmental impact of cryptoassets in the legislation, sources added.

Bitcoin mining relies on using vast computing power to process transactions, which in turn consumes massive amounts of energy.

The French presidency is willing to accept the European Commission’s proposal to disclose the energy consumption of CASPs, according to sources.

In addition, members of parliament want the EU executive’s arm to produce technical standards for such disclosures, along with a review clause.

Member states and the parliament are also clashing over the inclusion of anti-money laundering clauses in the MiCA package. National governments consider there to be a separate set of rules for it, while politicians want to create a list of CASPs that aren’t compliant with anti-money laundering rules, sources said.