The European Union granted approval on Tuesday, for the world’s inaugural comprehensive set of regulations concerning crypto assets. This significant development is expected to increase the pressure on countries like Britain and the United States to adopt similar measures in regulating crypto assets.
The development came in a European Union finance minister meeting in Brussels. Earlier, the rules were approved by the European Parliament last month.
The crypto assets regulation rules are expected to be rolled out from 2024.
Regulation of the crypto assets has attained a regulatory urgency following the collapse of the crypto exchange FTX.
“Recent events have confirmed the urgent need for imposing rules which will better protect Europeans who have invested in these assets, and prevent the misuse of crypto industry for the purposes of money laundering and financing of terrorism,” Elisabeth Svantesson, finance minister for Sweden, which holds the EU presidency, was quoted as saying by Reuters.
Under new rules, the firms would be required to obtain a license for issuing, trading and safeguarding cryptoassets, tokenised assets and stablecoins.
The EU ministers took steps to combat tax evasion and the use of cryptoasset transfers for money laundering by making transactions easier to trace.
They agreed on a requirement that from January 2026 service providers obtain the name of senders and beneficiaries in cryptoassets, regardless of the amount being transferred.
There was also agreement on amending rules on how member countries cooperate with each other in taxation to cover transactions in crypto-assets, and on exchanging information on advance tax rulings for the wealthiest individuals.
Crypto firms say they want certainty in regulation, putting pressure on countries to copy the EU rules, and on regulators to come up with global norms for cross-border activity.
Britain has outlined a phased approach, starting with stablecoins and broadening out to un-backed cryptoassets later on. However, no timeline for the exact execution of the regulation has been released so far.
The United States has focused on using existing securities rules for enforcement action in the sector while it decides on whether to introduce bespoke new rules and who would apply them.
Hester Peirce, one of the commissioners at the US derivatives regulator Commodity Futures Trading Commission, said last week that a number of federal and state authorities are trying to figure out what oversight role they could play in the crypto sector.
“We are wandering in the desert a bit,” Peirce told a conference, Reuters reported.