The European Council takes one

The framework proposed by the European Union (EU) to regulate cryptocurrencies is one step closer to ratification.

On Wednesday, the European Council, which sets the EU’s political agenda, adopted its position on the Crypto Assets Markets (MiCA) framework, according to a statement on its website. This means that the Council and the European Parliament can now enter into negotiations on the proposal before it is formally adopted into law. This agreement also formed the Council’s negotiating mandate to discuss MiCA with the European Parliament.

The MiCA framework generally captures cryptocurrencies such as bitcoin and promises to simplify the expansion of cryptocurrency companies across the EU by facilitating a passportable license.

Created in the wake of Facebook’s plans to issue a “basket-backed stablecoin” or cryptocurrency pegged to the value of a combination of other assets or coins, MiCA places great emphasis on regulating stablecoin issuers in particular. The proposed MiCA framework referred to this type of stablecoin as “asset-referenced tokens” and devoted approximately one-fifth of the package to describing the requirements for issuers of these tokens.

The European Council’s own 405-page trading mandate for MiCA shows that the EU might not be relieving token issuers with reference to assets, stating that they should “be subject to more stringent requirements than issuers of other crypto assets.”

The negotiating mandate also contained a number of exceptions to the MiCA framework. On the one hand, the Council has agreed that credit institutions authorized under the EU capital requirements directive “should not need another authorization under [MiCA] to issue tokens with reference to assets.” These institutions, according to the document, should also be exempt from the capital requirements that issuers of stablecoins must maintain under MiCA.

The Council document also said that MiCA regulations do not apply to non-fungible tokens (NFTs) “including digital art and collectibles, the value of which is attributable to the unique characteristics of each cryptoasset and the usefulness it brings to it. to the token holder “.

The document says the regulations also do not apply to tokens “that represent services or physical assets that are unique and non-fungible, such as product or real estate collateral.”

Other possible exceptions include crypto assets that are offered for free or as a reward, and transactions between global organizations such as the International Monetary Fund and the Bank for International Settlements.


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