EU MiCA Bill Takes One More Step Towards Adoption
The European Union’s Markets in Crypto Assets (MiCA) bill has reportedly been finalized and open for comment.
While the bill focuses primarily on stablecoins and has largely been silent on non-fungible tokens and the decentralized finance industry, the non-fungible tokens implied by the latest draft could put enforcers to sleep.
Leaked on September 20, 2022, neonw bill Enforcers are encouraged to consider a “substance over form” strategy, meaning that certain tokens with some degree of fungibility, such as NFTs, may fall under the bill’s purview. Although there is no explicit mention of NFTs in the bill that primarily deals with fungible cryptoassets.
The critical wording in the bill’s introduction, called Recital, suggests that certain NFTs could be considered “fungible” as part of a larger collection and thus subject to the bill’s provisions.
The recital echoes an EU press release earlier this year announcing the provisional agreement between the European Council Presidency and the European Parliament on the MiCA Act. “Non-Fungible Tokens (NFTs), i.e. digital assets that represent real objects such as artwork, music, and videos, will be excluded from the scope unless they fall into an existing cryptoasset class,” the press release said. famous.
The bill also requires companies such as exchanges and other crypto asset providers to adhere to strict consumer protection measures and be held liable for any consumer losses. It also limits stablecoin transactions to 200 million euros per day. Stablecoin issuers need to provide a minimum of sufficient liquidity.
Work on MiCA began in 2018, following the cryptocurrency boom of 2017.
Binance CEO hails new bill
Binance CEO Changpeng Zhao reacted positively to the news that MiCA was more or less finalized. “Good news from Europe. The latest draft of MiCA removes previous restrictions on non-euro stablecoins. Liquidity is the best protection for users,” he said tweet.
CZ also praised the White House’s recently released cryptocurrency framework, which has a similar leaning toward strong consumer protections and approaches to stablecoins from the perspective of the asset’s potential threat to financial stability.
Subsequent reports from the U.S. Department of Justice revealed new crypto enforcement initiatives, including a network of specialized attorneys trained to investigate and prosecute national crimes.
Still no clarification on cryptographic security status
The legislative process surrounding MiCA needs to be approved by the European Council and the European Parliament before it can come into force.
To date, public disclosures have notably lacked questions about how crypto assets are classified under the MiCA Act. More recently, decentralized assets have come to the attention of regulators due to their potential to become securities. Fragmented assets are fungible tokens that collectively represent an NFT.
In the U.S., the debate continues, with Securities and Exchange Commission Chairman Gary Gensler claiming that the “vast majority” of cryptocurrencies are securities and fall under the SEC’s jurisdiction.
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