November 28, 2022

The European Union Markets in Crypto Assets (MiCA) bill has reportedly been finalized and left open for comment.

While the bill has largely focused on stablecoins and has been largely silent about non-fungible tokens and the decentralized financial industry, the implicit inclusion of the latest draft of non-fungible tokens may trap implementers.

Leaked on September 20, 2022, and Northeastinvoice It encourages implementers to consider a “core over shape” strategy, which means that certain tokens such as NFTs with some degree of interchangeability can fall within the jurisdiction of the law. This is despite the lack of an explicit reference to NFTs in the invoice that primarily deal with redeemable crypto assets.

Crucial wording in the introduction to the law, called a recital, reveals that some NFTs that are part of a large group can be considered “replaceable,” and therefore subject to the provisions of the law.

Recital echoes an EU press release earlier this year, announcing an interim agreement reached by the Presidency of the European Council and the European Parliament on the MiCA bill. “Non-fungible tokens (NFTs), i.e. digital assets that represent real objects such as art, music, and videos, will be excluded from scope unless they fall into existing crypto asset classes,” the press release. pointed.

The bill also requires companies like exchanges and other providers of crypto assets to comply with strict consumer protection practices and be responsible for any consumer losses. It also limits stablecoin transactions to 200 million euros per day. Stablecoin issuers will need to provide sufficient minimum liquidity.

Work on MiCA began in 2018 after the 2017 crypto boom.

Binance CEO hails new bill

Binance CEO Changpeng ‘CZ’ Zhao responded positively to the news that MiCA has been more or less completed. “Good news from Europe. MiCA’s latest draft removes previous restrictions on non-euro stablecoins. Liquidity is the best protection for users.” chirp.

Czechoslovakia also praised the recent crypto framework released by the White House which has a similar tendency towards aggressive consumer protection measures, and treats stablecoins from the point of view of the assets’ potential threat to financial stability.

Subsequent reports released by the US Department of Justice revealed new cryptographic law enforcement initiatives, including a network of specialized lawyers trained to investigate and prosecute national crimes.

There is no clarification yet on the security status of encryption

The legislative process surrounding MiCA will need approval by the European Council and the European Parliament before it can enter into force.

Notably absent from public disclosure so far is the question of how crypto assets are classified under MiCA. Recently, fragmented assets have attracted the attention of regulators because they have the potential to be securities. Fragmented assets are redeemable tokens that together represent one NFT.

In the US, the controversy is still raging, with the Chairman of the Securities and Exchange Commission, Gary Gensler, claiming that the “vast majority” of cryptocurrencies are securities, and are under the jurisdiction of the SEC.

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