- EU regulators have introduced stricter rules for crypto shareholders, as part of the Markets in Crypto Assets regulation (MiCA), set to take effect by December 2024.
- The regulations aim to increase transparency and accountability in the crypto industry, targeting individuals or entities holding over 10% stakes in crypto companies.
European Union (EU) regulators have unveiled a set of comprehensive rules with the aim of bringing more transparency and accountability to the crypto industry. The proposed regulations, part of the forthcoming Markets in Crypto Assets regulation (MiCA), which is expected to take effect by December 2024, target individuals or entities holding more than 10% stakes in crypto companies. Their primary goal is to ensure that those seeking crypto licenses can prove they have a clean track record, free from past convictions or sanctions.
This move comes in response to recent challenges faced by some prominent figures in the crypto world, including individuals like Sam Bankman-Fried from FTX, Alex Mashinsky from Celsius, and Changpeng “CZ” Zhao from Binance. These figures have been dealing with legal issues in the United States related to customer deception and non-compliance with securities laws. Such cases have underscored the need for tighter regulatory measures in the crypto space.
The proposed regulations also place a significant emphasis on the integrity of shareholders and board members of crypto asset service providers. Specifically, they should not have any prior convictions related to money laundering, terrorist financing, or any other offenses that could cast doubts on their reputations. The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA), which are responsible for shaping banking and securities market laws within the EU, stress the importance of maintaining an untarnished reputation at all times.
These ownership restrictions bear some similarity to measures previously implemented in the traditional financial sector. The goal is to prevent individuals with dubious backgrounds, such as former Italian Prime Minister Silvio Berlusconi, who was previously convicted of tax fraud, from holding significant stakes in banks.
In summary, the EU’s proposed rules are designed to instill confidence and credibility within the crypto industry by ensuring that those in key ownership and decision-making positions have a clean history devoid of any financial crimes or ethical lapses.