The European Commission, the European Parliament and the bloc’s member states on Thursday hammered out a new agreement on crypto industry reforms known as the Market for Cryptoassets (MiCA), which is the first attempt to create a comprehensive regulatory framework for digital assets in the region, CNBC writes.

According to MEP Stephan Berger, the rules are intended to “bring order to the Wild West of cryptoassets.” The move comes a day after 3 major EU institutions finalized measures aimed at curbing money laundering in cryptocurrencies. The new rules will affect digital assets at a difficult time, with bitcoin experiencing its worst quarter in more than a decade.

Bringing order to the “Wild West of cryptocurrencies” means that a new agreement (Markets in Crypto-Assets or MiCA) requires issuers of stablecoins, such as Tether and USDC Circle, to maintain sufficient reserves to meet redemption requests in the event of massive customer withdrawals. Stablecoins that become too large will also face transaction limits of up to €200 million per day.

The regulator – the European Securities and Markets Authority, or ESMA – will have the power to intervene, ban or restrict cryptocurrency platforms if they are seen not to adequately protect investors or threaten market integrity or financial stability.

“Today we are bringing order to the Wild West of cryptoassets and setting clear rules for a harmonized market that will provide legal certainty for cryptoasset issuers, guarantee equal rights for service providers and ensure high standards for consumers and investors,” said Stefan Berger.

The new rules will also affect the environment, as MiCA requires issuing companies to disclose information on energy consumption as well as the environmental impact of digital assets. Such a proposal could have abolished crypto-mining, the energy-intensive process of minting new units of bitcoins and other tokens. However, lawmakers rejected it in March. The rules would not affect issuerless tokens such as bitcoin, but trading platforms would have to warn consumers about the risk of losses associated with trading digital tokens.

Non-fungible tokens (NFTs) representing ownership of digital objects such as works of art have been excluded from the rules. Admittedly, the EU Commission will need to determine within 18 months whether NFTs require their own regulatory regime.

One of the main provisions of the new rules relate to reducing anonymity for certain cryptocurrency transactions. Authorities in the region are deeply concerned about the use of cryptoassets to launder illicit proceeds.

Transfers between exchanges and so-called “unallocated wallets” belonging to individuals will have to be reported if the amount of transactions exceeds the €1,000 threshold.

The development of the new rules follows the collapse of Terra USD, a so-called “algorithmic” stablecoin that attempted to maintain a $1 value using a complex algorithm. Its fiasco resulted in hundreds of billions of dollars disappearing from the entire crypto market.

“The EU is generally unhappy with stablecoins,” said Robert Kopitsch, secretary general of the group Blockchain for Europe.

EU policymakers are skeptical of such tokens, which aim to be pegged to existing assets such as the dollar. Authorities fear that private digital tokens could eventually threaten sovereign currencies such as the euro.

According to Paolo Ardoino, chief technology officer at Tether, “MiCA is one of the most progressive initiatives to date and aims to promote crypto innovation and adoption in the European region.”

“Market harmonization is key for Europe to really see the emergence of large crypto companies,” said Patrik Hansen, advisor at venture capital fund Presight Capital. – Europe lacks large cryptocurrency companies right now, and fragmentation is one of the reasons why.”