On December 30, the next phase of the Markets in Crypto-Assets (MiCA) regulation officially came into effect, significantly altering how cryptocurrencies are regulated within the European Union. Here’s what’s changing:
- Mandatory KYC for Transactions Over €1,000
Any transaction exceeding €1,000 now requires the wallet owner to undergo Know Your Customer (KYC) verification, linking personal data to the wallet. It remains unclear whether this verification will be required for every transaction or if a one-time confirmation of wallet ownership will suffice. - Ban on Anonymous Crypto Payments
To combat money laundering and terrorism financing, anonymous crypto transactions are fully prohibited. While this enhances security, it may restrict access to decentralized financial services (DeFi). - Restrictions on Stablecoins
Starting in 2025, fully algorithmic stablecoins and others like Tether (USDT) that do not comply with MiCA standards will be banned from trading in the EU. - Licensing for Crypto Asset Issuers
Crypto asset issuers must now obtain licenses, provide detailed whitepapers for their projects, and meet strict risk management and accountability standards. Smaller companies may struggle to comply due to financial constraints, potentially reducing market competition. - Shift Towards Decentralized Exchanges (DEX)
Decentralized exchanges could gain popularity by bypassing increased regulation. However, their status may also be subject to future scrutiny. Similarly, users might turn to transaction mixers to obscure their transaction history, though this could attract regulatory attention. - Focus on Privacy Coins
Enthusiasts may explore anonymous cryptocurrencies like Monero (XMR), but such assets face increasing restrictions, with Monero already banned in some EU countries. - USDT’s Compliance Efforts
Tether has invested in StablR, a European company licensed for e-money operations in Malta. This move aims to align USDT with MiCA requirements, as StablR operates under EU regulatory standards. - MoonPay Secures MiCA Compliance
On December 30, MoonPay, a cryptocurrency payment solutions provider, officially received its operating license under MiCA regulations.
These changes represent a major shift in the EU’s approach to cryptocurrencies, aiming for greater transparency and security, though they may also challenge innovation and accessibility within the crypto market.
