Brussels is the first to impose rules on crypto
The European Union is going to restrict the cryptocurrency market. The EU Assets and the European Parliament reached an agreement on Thursday evening in Brussels on the Markets in Crypto, the MiCA for short. It is the first time that cryptocurrencies such as bitcoin and publishers of services for changing cryptocurrencies, for example, are subject to European rules.
With the agreement, the EU once again ranks as a trendsetter in digital legislation. After all, six years ago, privacy legislation was raised to European standard.
Earlier this year, new rules for major tech companies, including market power and unfair competition, were also discussed: the Digital Markets Act. The Digital Services Act added a sister package to make the internet safer and more reliable.
According to French Finance Minister Bruno Le Maire, the MiCA is “historical legislation that will end the Wild West that has become the crypto market.” In a press release, he writes: “The new rules will better protect EU citizens who own cryptocurrencies and prevent their abuse from being abused.”
more transparency
The new legislation obliges the crypto sector, among other things, to be more transparent, both about their own financial and position about the coins they offer. “Crypto-providers must write a white paper about each currency, with all its features and risks. As a result, investors are better able to buy currencies that are good for them,’ expects Teunis Brosens, chief economist digital affairs at ING.
“Now there is no protection whatsoever for crypto investors when something goes wrong. They are fully focused,” Brosen says. “If this legislation goes into effect in 2024, investors have somewhere to file a complaint. And they finally enjoy legal protection.”
Service providers in the crypto sector also need to improve their business structure and put their computer systems in order. In this way, they should be able to thwart cyber attacks, which should reduce the number of scams. Brosens: “It actually concerns very basic requirements for running a financial institution.” That is not superfluous: last year cryptocurrencies consumers were defrauded for billions of euros.
NFTs
The chance that the legislation will deal with all the problems in the crypto market is equally small, according to Brosens. “The problem with EU legislation is that it always lags behind practice. Especially in the field of crypto, the drastic ones are moving fast.”
For example, providers of Non-Fungible Tokens (NFTs) — ideal digital investment objects — are not yet covered by the MiCA, says Brosens. After all, when European Union officials started writing the MiCA two years ago, NFTs are not yet experiencing their major breakthrough. Brosens: “With these laws and regulations, a large part of the Wild West is being pulled into the raked world. But the Wild West will certainly survive.”
A version of this article also in the newspaper of 2 July 2022