The EU Moving Closer with New Crypto Legislative Package
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Not a few weeks ago, there was no light in that tunnel, with many analysts and experts believing it couldn’t be passed before 2025. Now, representatives of relevant European institutions believe that the deal could come much earlier than expected.
What is MiCA?
MiCA is a special legislative package that will introduce EU-wide laws for crypto assets. It provides a legal framework for crypto-asset markets and defines the regulatory treatment of said market. The law will deal with all digital assets that are currently not recognized by financial services legislation.
Of course, no law on crypto can pass without doing harm to the community. Member states of the EU bloc still disagree on several aspects which have been an obstacle too high to pass the law quickly. For example, there’s been disagreement on how to treat stablecoins in payments. The supervision of crypto asset service providers is another major obstacle so far. NFTs are causing headaches too, although they’re the smallest issue considering the legal framework for all the other stuff mentioned in the proposed law.
With MiCA, there are controversial ideas that crypto enthusiasts in Europe certainly won’t like. For example, there will most likely be a limit on crypto transactions that aren’t denominated in EUR. This is a new addition to the proposed bill that comes after Terra’s Luna crash. It was a deep cut that destabilized the crypto market as a whole. Investor protection is a big idea in the MiCA law, as is gauging the potential financial stability of cryptocurrencies.
Discussions on the regulatory framework continue, with the package currently in the trilogue stage of EU’s legislative process. The final draft must be coordinated by the European Parliament, the EU Council, and the European Commission, so it’ll still be a while until things are ironed out.
The Environmental Aspect of Cryptos
One notable element in the current negotiations is the environmental aspect of cryptocurrencies. In general, the EU is all about a green initiative, and crypto mining surely doesn’t fit the bill. This is one of the key elements in the negotiations, so the parties need to address the environmental impact of cryptocurrencies before an agreement can be reached.
Anti-money laundering policies are also an issue. Unlike the EU, national governments are pushing for another set of rules that will establish framework for non-compliant CASPs. It’s clear that there are still things to iron out before the set of rules is passed. Cryptos are a big unknown for the EU as it seems, so while the MiCA law won’t pass soon, it’ll obviously arrive before 2025.
We just hope that the legal framework is sound and that no one will be hurt, not service providers or the European Union.
