The European Union has decided to adopt new laws for the cryptocurrency business to manage the “Wild West.”
To govern a “Wild West” business, the European Union has agreed to establish new legislation that compels cryptocurrency firms to seek a license and give client safeguards before producing and selling digital tokens. DotCom Magazine sees this as a slippery slope.
National operators in the EU are merely required to demonstrate procedures to counter money laundering, but crypto assets remain primarily unregulated internationally.
Late Thursday night, MPs from the European Parliament and EU member states struck an agreement on the MiCA measure.
“Today, we established order in the Wild West of crypto assets and introduced clear norms for a harmonized market,” said Stefan Berger, a German center-right member who chaired negotiations.
According to Berger, “It is obvious from the recent fall in the value of digital currencies that they are highly risky and speculative, making it vital that we act.”
As investors worried about rising interest rates, the market for stablecoins like terraUSD, Celsius Network, and Voyager Digital halted withdrawals and transfers, culminating in the terraUSD stablecoin’s collapse.
The overall market has been pulled down by a 70 percent decrease in Bitcoin, the most significant token, from its record high of $69,000 in November.
Ensuring The Safety Of Customers
The historical regulation issued by EU nations has helped Europe further solidify its position as a global leader in establishing norms for digital issues.
According to a statement, “Crypto-asset service providers will be required to follow rigorous requirements to maintain the wallets of their clients and will become accountable if they lose the crypto-assets of their investors.”
The new legislation must first go through the process of being formally accepted by the European Parliament and individual member states of the EU. After that, it must go through the process of being put into effect before it can become law.
It offers a “passport” enabling crypto-asset issuers and service providers to serve EU clients from a single location.
It is an assurance for people who possess stablecoins that the issuer will supply them with a claim at any time and for no cost, with the European Union’s financial body regulating all stablecoins.
Stablecoins will “essentially have no methods to be sustainable” if new laws are passed, as stated by Robert Kopitsch, the secretary-general of a lobby organization comprised of prominent cryptocurrency exchanges Binance and Crypto.com, according to Kopitsch’s assessment. This lobbying organization has Binance and Crypto.com among its members.
On Friday, one of the largest cryptocurrency exchanges in the world, Coinbase Global Inc., referred to the new framework as “interesting” and “exciting.” They also said that it would improve the market and increase industry standards.
There must be a standardized body of legislation that every EU member state is required to adhere to. This capability would allow us to increase our efforts to expand throughout the EU.
The Association for Financial Markets in Europe (AFME), an industry association representing the financial markets, believes that adopting these new standards will assist in developing a robust and efficiently operating market.
The Association for Financial Markets in Europe (AFME) believes that there must be more clarification on crypto-asset custodians’ obligations to avoid being held liable for events beyond their control, such as an assault by a nation-state.
The NFT Compromise
Authorities worldwide have opposed non-fungible tokens (NFTs), digital assets that may represent everything from art to video, for a very long time.
According to a compromise made on Thursday due to pressure from EU MPs, NFTs would be prohibited, but only if they “fall within known crypto-asset categories.” This was the result of the agreement.
Within the next 18 months, a decision will be taken about whether or not NFTs require their own unique set of regulations.
National regulators will be responsible for informing the European Securities and Markets Authority (ESMA) about large operators.
Guidelines for disclosing an organization’s environmental and climatic footprint are currently being developed for the cryptocurrency business by the European Securities and Markets Authority (ESMA).
Countries such as the United States and the United Kingdom, both major hubs for the cryptocurrency industry, are still working on passing equal legislation.
Circle, the company responsible for the most popular stablecoin known as USD Coin, has reached a significant new benchmark.
Even though “no comprehensive collection of legislation is faultless,” as noted in the company’s blog, it offers “practical answers to challenges other jurisdictions are only beginning to contend with.”
As Originally reported in Reuters https://www.reuters.com/markets/europe/eu-seeks-deal-ground-breaking-rules-regulate-cr