The European Parliament has voted through landmark legislation on cryptocurrency, which will bring new industry rules across the 27-country bloc. 

In a vote on Thursday, Markets in Crypto Assets (MiCA) passed with 517 votes in favor and 38 against, with 18 abstentions. 

Crypto firms including Binance, Coinbase, and Kraken welcomed the passing of the landmark legislation. Additionally, Stefan Berger, the MEP who led the bill’s creation, said in a statement that Europe is now the first continent with comprehensive regulation for crypto assets.

“In order for new coins to be approved in the EU, it must be ensured in the future that their business model will not endanger our currency stability. The new supervisory structures will also be a bulwark against Lehman Brothers moments like the crypto exchange FTX,” he said.

The MiCA legislation means that the EU will have a unified approach to crypto asset regulation across all 27 member states, making it possible for firms approved in one country to passport their business into others with minimal additional paperwork.

But to achieve initial approval, firms will face much higher standards of disclosure, including the preparation of a detailed white paper for each asset offered. Stablecoin issuers, meanwhile, are subject to even tighter rules, including holding sufficient cash to back up customer funds.

MiCA will also ask crypto firms to report the environmental impact of their activities, in a compromise measure after lawmakers removed an all-out ban on the proof-of-work mechanism from an earlier draft.

While concerns have been raised about the possible administrative burden of MiCA on small firms, many crypto companies have welcomed the European Union’s recognition of the industry.

Tom Duff Gordon, Vice President of International Policy at Coinbase said, “The European Parliament’s adoption of MiCA today is a pivotal moment for the crypto industry in the region, and the work of European policymakers should be seen as exemplary,”

“The region is recognizing the potential and societal promise that emerging technology can provide. The EU is stepping up to the mark, while other notable jurisdictions are struggling to provide a solid, cohesive regulatory framework that gives clarity to a burgeoning innovative industry,” he added.

MiCA will not come into effect immediately. Once it has been approved by the European Council, it can be officially made EU law. The EU’s securities regulator, the ESMA, will then produce guidance on the details of how the regulation should be applied.

There is some breathing room for both companies and member states to catch up to the regulation, with rules coming into force on stablecoins in July 2024, while other requirements will not be enforced until January 2025.