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Crypto regulation: EU agrees on first comprehensive framework for digital assets

Yahoo Finance's Jennifer Schonberger details the EU's "Markets in Crypto-Asset" Law to regulate cryptocurrency exchanges, stablecoins, and protect investors from scams and hacks.

Video Transcript

RACHELLE AKUFFO: Well, reining in the, quote, "Wild West of crypto." Those comments coming from the EU, as it agreed to landmark regulation in the crypto space. Our very own Jen Schonberger is following the story. So, Jen, what's in this agreement?

JENNIFER SCHONBERGER: Good afternoon. That's the European Union leading the crypto regulatory charge, securing agreement Thursday night, what will likely be the comprehensive regulatory framework for crypto in the world. The rules come as crypto markets have plunged. Bitcoin just clocking one of the worst quarters ever, slumping nearly 4% in the month of June alone, and as investors had difficulty getting their money back or accessing their crypto assets, as was the case crypto lender Celsius.

The new law [INAUDIBLE] as market in crypto assets, or MICA, would protect investors from scams and hacks, regulate exchanges, and require stablecoins to maintain a lot of capital to meet redemptions in the event there are a lot of draw requests, as we saw with the case in the run of Terra USD. Now firms will also have to disclose how much energy they consume. And the European Securities and Markets Authority will be given powers to ban or restrict crypto platforms if they are not properly protecting investors or threatening financial stability. And while providers of Bitcoin related services could fall under the regulations, Bitcoin itself would not.

Now, the EU is a first mover, likely setting what will be a global standard for crypto regulations. Back here in the United States, various lawmakers on Capitol Hill have set forth legislative proposals. And various agencies in the government are studying how to regulate crypto under the direction of President Biden's executive order earlier this year. The reality is, though, for anything to really get [INAUDIBLE], we probably won't see that here in the US until 2023, maybe even 2024. Guys.

RACHELLE AKUFFO: Certainly keep an eye on those global repercussions. Thank you so much, our very own Jen Schonberger.