MiCA Vote in the European Parliament: A Step Forward or Backward for the Crypto Sector?

Paris, March 15, 2022– Yesterday, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) voted on its version of the compromise text for the draft MiCA (Markets in Crypto-Assets) regulation, which was published in September 2020 by the European Commission. This marks a major milestone in the process of developing EU regulations, bringing us closer to the final text that will shape the French and European crypto-asset industry in the coming years. 

The choice of a compromise solution: a victory for crypto-asset companies

For several weeks, intense negotiations took place within the European Parliament to decide on a proposal that would effectively ban certain consensus protocols, such as Proof-of-Work, in Europe. The disagreements had already led to a postponement of the vote.

However, Parliament chose to opt for a compromise solution today, thereby treating the environmental impact of mining activities within the European taxonomy (rather than within the MiCA regulation) on an equal footing with other economic activities.

This approach, which was supported by ADAN, is both the fairest and most effective way to address the challenge of the green transition. It encourages and strengthens the crypto sector’s contribution to the EU’s environmental goals without hindering the growth of our current and future industry leaders. 

Several concerns still need to be addressed before we can envision the emergence of a strong sector in Europe

MiCA’s goal is to create a protective framework tailored to the digital age that encourages innovation in crypto-assets in order to shape the future of European finance for the benefit of citizens. However, the compromise reached following debates in the European Parliament suggests a text that falls short of its mark, thereby undermining the European Union’s credibility as a leading hub for the digital economy of tomorrow. 

The concerns are manifold. 

• Regulations that are ill-suited to the development of NFTs (non-fungible tokens) and DeFi (decentralized finance) in Europe.
• The introduction of prohibitive requirements for the issuance of euro-pegged stablecoins—modeled on banking regulations—which will reinforce the dominance of dollar-pegged stablecoins (currently 99% of the market).
• The lack of a phased approach to the simultaneous implementation of MiCA and other regulations targeting crypto entities (crypto-asset transfers, SFDR, SCG, etc.). 

“The European Union risks shooting itself in the foot twice: once by further weakening its strategic autonomy, and again by undermining its monetary sovereignty,” warns Faustine Fleuret, president of the Association for the Development of Digital Assets. 

A train that’s already on its way—but there’s still time to catch it

Unlike Europe, the United States has grasped the magnitude of the challenge. This is evidencedby the guidelines issued by President Joseph Bidenlast week. They have understood the role that crypto-assets will play in sustaining their strategy of global political, economic, and cultural dominance: as an accelerator of their financial power, a confirmation of their monetary sovereignty, a catalyst for their competitiveness, and a new vehicle for American values. The New World could find in MiCA an opportunity to welcome the companies and talent we have failed to retain, and to fill the jobs we have failed to create. In light of successive crises that have highlighted the European Union’s dependence in several strategic areas, and the mistakes already made by abandoning certain key industries (such as the cloud), missing the crypto shift risks further weakening our position and influence on the global stage. 

Whether it concerns the absolute necessity of European stakeholders deploying an ecosystem of euro-denominated stablecoins or seizing the opportunity presented by mining to improve our overall energy efficiency,ADAN’s manifestoaddressed to the 2022 presidential candidates sets out concrete proposals. 

Three guiding principles must now shape the European trilogue: adaptation, proportionality, and pragmatism. At a time when MiCA is shaping the future of the crypto industry, we must focus not only on security, but also on sovereignty and competitiveness.