The EU will soon take big steps in regulating the crypto sector, once it finishes negotiations around two new crypto bills. According to experts, these new laws will have a huge impact on the crypto market in Europe and even beyond.
The two new bills in question are: Markets in Crypto Assets (MiCA) and Transfer of Funds Regulation (TFR).
The MiCA proposal is a very comprehensive proposal that aims to regulate most of the existing crypto activities within EU states. The TFR proposal focuses specifically on crypto transfers. The final EU meeting on these proposals will take place on June 30.
EU likely to include NFTs in regulation
The final discussion will will address, among other things, whether non-fungible tokens (NFTs)
should be included in the scope of the MiCA. Initially, the European Commission wanted this to be the case, while the Council and Parliament opposed it, but it seems that the three bodies have now reached a compromise.
The likely compromise is that publishers of NFTs will be exempt. However, those companies that provide services for third-party NFTs will be covered by the regulations. This means they will need a Crypto Asset Services Provider (CASP) license to operate.
What about stablecoins?
In addition, stablecoins
will be discussed, which have become a hot topic since Terra's (LUNA) crash. Although the main aspects have been finalized, there are still a few open aspects.
These include dealing with the technical thresholds for large stablecoins and who would be responsible for monitoring stablecoins. The choice is between oversight by national bodies or through a unified continental institution.
Meanwhile, decentralized finance (DeFi) will not fall under the scope of the MiCA. The committee plans to publish a report in 2023 and set up a pilot project for supervision of DeFi.
The meeting will also not discuss a ban on Bitcoin mining, but there will be strict disclosure requirements on the environmental impact for cryptocurrency service providers.
There are still several open issues for the TFR and the negotiations are expected to be contentious. So far, all crypto transactions will be covered by the TFR, with the exception of peer-to-peer transfers.
Exactly what this will look like is not yet clear, as there is still much to be discussed, such as the verification of non-hosted wallets, the CASP obligation to report transfers over 1,000 euros, the blacklist for AML, and so on. It is not known whether deliberations on the TFR will be completed in June.
Globally, crypto-regulation is rapidly increasing, meaning that governments are beginning to take digital assets more seriously. For some crypto supporters, however, it is not nice news, as they believe it takes away some of the decentralization and anonymity of crypto. Still, laws and regulations seem to be the only route for true global adoption.