The Economic and Financial Affairs Council of the European Union — comprising finance ministers of all member states — has given the green light to the highly-anticipated Markets in Crypto-Assets (MiCA) regulation after a vote on May 16.

Finance ministers from 27 member states voted in favor of the MiCA bill, and amendments to several regulations and directives relating to the new legislation.

Two more pieces of legislation, including regulation on information accompanying transfers of funds and certain crypto assets, were also adopted by the European Parliament in conjunction with MiCA’s adoption.

Related: Industry leaders and policymakers react to passage of MiCA in EU

The European Parliament formally adopted the MiCA legislation on April 20, paving the way for final approval by the European Council before the regulatory parameters take effect.

The legislation sets clear regulatory guidelines and requirements for using cryptocurrencies and related services and activities across the European Union. The scope of the legislation covers a range of cryptocurrencies, digital assets, utility tokens and stablecoins.

The next step in the long process for MiCA to become EU law requires the bill to be published in the Official Journal of the European Union. MiCA will come into effect within a year, meaning the regulations will finally become law midway through 2024.

The European Commission first proposed MiCA in September 2020, but it has faced numerous hurdles and postponements on its way through the legislative process. 

The legislation has broadly been welcomed by cryptocurrency service providers and proponents alike, given that it creates a single market environment across Europe regarding regulatory requirements and operating procedures.

Related: EU MiCA crypto regulation is a ‘balancing act’: Paris Blockchain Week 2023

Key components of MiCA legislation include registration and authorization requirements for issuers of cryptocurrencies, exchanges and wallet providers. 

Stablecoin issuers must meet certain security and risk mitigation requirements, while cryptocurrency custody services must ensure sufficient security and safety measures to address potential cybersecurity and operational failures.

The legislation also provides a framework to prevent market abuse, insider trading and manipulative behavior in the cryptocurrency space.

This is a developing story, and further information will be added as it becomes available.

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