An overview of the different types of EU legislation

Types of EU Legislation

Regulation has always been a hot topic in the Web3 community, as the burgeoning industry has presented watchdogs around the world with a major challenge – how to regulate the sector to ensure investor protection without stifling innovation. In that race, Europe has been leading the charge with efforts to create a comprehensive regulatory framework at the EU level. But to better understand these efforts, we need to first get a better understanding of EU legislation, which can often be confusing and overwhelming to the uninitiated. So let’s take a closer look at the different types of EU legislation.

EU legislation

There are several types of legislative acts in the EU, some binding, some non-binding. Perhaps the most notable ones are regulations and directives, but there are a few others that also warrant a look.


A regulation is a legislative act that has binding power in all EU member states. It comes into effect on a set date and must be implemented in its entirety across the whole bloc. In other words, each country must fully implement a given regulation by the date it comes into force.


A directive is a non-binding legislative act that is applicable to all EU member states. The act sets out certain goals that must be achieved by all countries in the EU. However, each member state is free to decide how the expected results would be achieved. In other words, member states are free to devise their own national laws that would help them achieve the goals laid down in the directive.


A decision is another binding EU legislative act. Unlike regulations, however, decisions target specific cases and only apply to the countries, organizations or individuals to whom they are directed.


Recommendations are non-binding instruments that allow institutions to express their views without imposing legal obligations on those to whom the recommendations are addressed. They are used to suggest a course of action, rather than enforce it.


Also non-binding, opinions are instruments that institutions use to make statements that do not carry legal implications. Opinions are not meant to enforce a course of action, but to inform the creation of new laws. Opinions are issued by the main EU institutions (the European Commission, Council and Parliament), Committee of the Regions and the European Economic and Social Committee.

Important crypto-related legislation

When it comes to crypto, the most important piece of EU legislation has so far been the Markets in Crypto Assets regulation, better known as MiCA. It’s a comprehensive regulation with focus on crypto assets, especially stablecoins, and crypto asset service providers (CASPs). The regulation is set to come into force in Q3 2023 for stablecoins and in Q2 2024 for CASPs. Both the European Council and the European Parliament Committee on Economic and Monetary Affairs (ECON) passed the regulation in votes held on October 5th and October 10th, respectively.

Expect our overview of the finalized MiCA version in the near future. In the meantime, learn more about what MiCA is aiming to achieve from our detailed overview of an earlier draft of the regulation.

Following the Oct. 10 MiCA vote, ECON also approved a provisional deal on the Transfer of Funds Regulation (TFR). That legislation is aimed at boosting its anti-money laundering measures by introducing rules for tracing transfers of crypto assets. TFR will be aligned with MiCA. Both regulations await final votes in the full EU Parliament. The MiCA vote was recently postponed to April, as the regulation needs to be translated into the 24 official languages in the European Union.

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