This regulation is currently in proposal mode for the crypto market by the EU and will pose many compliance hurdles for any Libra-like project intending to perform functions in Europe.
In the crypto world, fall appears as the opening and promising season for regulators. Although unprecedented, the year 2020 is no exception to this trend. The situation is highly tense on both sides of the Atlantic: markets were still processing news from the US Commodity Futures Trading Commission cracking down on derivatives exchange platform BitMEX and the Financial Conduct Authority, the British financial watchdog, was in the move to ban retail investors from using derivatives in cryptocurrency.
This dense cycle is bringing a lot of long-lasting effects on the global financial system, so the EU finally proposed legislation for crypto markets.
Stablecoins and stability is on the table: Regulation of the Crypto Assets Markets
The project, known as “Regulation of the Crypto Assets Markets,” or MiCA, is a proposal submitted by the European Commission, the executive branch of the EU. It is set to go through a fairly lengthy legislative process before getting its form as a solid law, which means it could take months and even years before the new rules begin to affect and affect the system.
The text shows that stablecoins, which are also referred to as “asset-related tokens” and “electronic money tokens” in the document is high on the minds of European legislators: MiCA highlights this asset class and provides users with a tailored regulatory framework.
Under the proposed law, stablecoin issuers will act and be included as a legal entity in one of the EU member states. Other requirements set the inclusion of provisions related to capital, investor rights, custody of assets, disclosure of information, and governance provisions.
Libra as the starting point for EU thinking about the dangers and opportunities presented by asset-related tokens.
The depth of concern of senior EU officials to preserve the Union’s monetary sovereignty is illustrated by the fact that, in early September, “the finance ministers of Germany, France, Italy, Spain, and the Netherlands issued a joint statement, outlining that stablecoin operations in the European Union should be halted until legal, regulatory and supervisory issues are addressed, “said Konstantin Richter, CEO, and founder of infrastructure company Blockdaemon.
Richter added that some of the most visible figures in European financial policy, such as German Finance Minister Olaf Scholz, have advocated for the introduction of the regulatory framework.
The experts cited the Facebook-backed stablecoin Libra as the starting point for EU thinking about the dangers and opportunities presented by asset-related tokens.
Mattia Rattaggi, chairman of the board of directors of FICAS AG – a crypto investment management company based in Switzerland – stated that stablecoins have the greatest probability of great impact, as the application of blockchain technology.
By: Jenson Nuñez.
