Crypto regulation in the European Union has been in the pipeline for some time. The European Council had earlier provided a set of regulatory frameworks that will help streamline crypto operations in the region, and even globally with time. These recommendations are closer to getting ratified.
According to a released statement, the European Council has adopted a position on the Markets in Crypto Assets (MiCA) framework. The only remaining step is the negotiation with the European parliament before the proposal can be adopted into law.
The European crypto regulations framework looks to streamline digital currency operations and make it simpler for crypto firms to expand throughout the region. It mirrors the Australian senate committee looking to make the country a crypto hub.
If passed, these regulations will be one of the most robust as it looks to streamline the whole crypto market and related operations. So far, there are no considerable objections from the parliament or any other political outfit. It means, there is more likelihood of the regulations passing with ease and becoming law. There’s also only very little possibility that some clauses of the recommendations would be changed.
What are the possible impacts of the new EU regulations on crypto?
As a major regulation shift, the EU proposals will impact the crypto market. The European Commission maintains that it aims to develop and promote the adoption of new technologies in the financial sector, part of this being distributed ledger technology.
The commission claims the new regulations are all about supporting innovation and fair competition while protecting retail investors and ensuring market integrity in the crypto market. It is also looking to speed cross border business expansion and scaling by crypto-related service providers and ensuring access to banking services for smooth operations.
To achieve this, the regulations look into different crypto elements. According to the document, non-fungible crypto assets such as digital art and collectibles are not bound to regulations even when traded in the open market. Utility tokens, crypto assets offered for free or those created as a reward for the maintenance of a network will also not be tied to regulations.
Stablecoins, however, will be under strict regulation. Only recognised credit institutions and electronic money institutions will offer stablecoins. The institutions offering these tokens will also be under strict regulations. At the same time, retail holders will not be able to earn interest on their stablecoins.
The regulation also looks to safeguard investors by ensuring only worthwhile projects are launched. The law will require every upcoming crypto project to have a detailed whitepaper while also establishing rules on market communication. This will help reduce the risk of scams and false advertisements.
Centralised crypto exchanges will be under strict regulations as they have to apply for authorisation before they can start practising. Decentralised exchanges and self custody/wallets however will be under no regulations.
It might take some time before the proposal is passed and becomes law. However, when it happens, it will lead to a more streamlined European crypto market that will also impact the rest of the crypto landscape worldwide.
