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European Commission has proposed unexpectedly accommodating rules on innovation and cryptocurrencies

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European Commission has proposed an “innovation-friendly” legal framework that “does not constitute a barrier to the use of new technologies”. In a ten-page document, the entire cryptocurrency space is covered by several points. Let’s take a closer look at them.

European Commission has proposed unexpectedly accommodating rules on innovation and cryptocurrencies
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Four main goals

The first objective is the legal certainty needed for both crypto-assets not covered by existing EU financial services legislation, the use of DLT [Distributed Ledger Technology or blockchain] in financial services and the setting of rules for tokennization of traditional financial instruments.

The second goal is to support innovation. To support the deployment of DLT and the development of services, it is necessary to put in place a reliable and proportionate framework to promote responsible innovation and fair competition.

The third objective is to ensure an adequate level of consumer, investor and market integrity protection and the fourth objective is to ensure financial stability.

Bill of European Commission probably in the third quarter

According to the European Commission, the bill is expected in the third quarter, but a document has already been sent to the Member States, which should serve to “facilitate discussions”. The document states, among other things:

“Regulation of cryptocurrency assets should monitor their economic function. Securities tokens, ie crypto assets that have all the characteristics of a financial instrument, should be regulated and supervised under MiFID II (Directive 2014/65 / EU). In order to clarify this and ensure full harmonization of this approach, a change in the notion of a financial instrument could be considered (Article 4 (15)). This will ensure that these financial instruments can be issued on the blockchain. “

The second category mentioned in the proposal is hybrid tokens. The proposal does not yet say what hybrid tokens are, but the generally accepted principle is that the new regulations would cover aspects not covered by the current rules. It could be, for example, DeFi tokens, which you get, for example, by subscribing to a newsletter, etc.

This would probably cover everything where it is not entirely clear that it falls under the MiCA.

“MiCA’s main requirement for issuers would be to publish a harmonized document that accompanies the issuance of crypto assets in the EU (detailed description of the issuer, project description and intended use of funds, offer conditions, rights and obligations associated with crypto assets and risks). Certain exceptions to this document would also be introduced for small offers of crypto assets (value up to EUR 1 million over a period of twelve months) and for offers aimed at qualified investors. “

Interestingly from this requirement is the fact that the European Commission does not require the permission of the National Competent Authority (NCA), but must be informed and, if something goes wrong, the Single European Market Authority. – SEMA) may take remedial action.

Definitions and new requirements

For the purposes of the Regulation, MiCA would define, inter alia, the following terms: cryptocurrency asset, utility token, cryptocurrency asset secured by another asset and other cryptocurrency-related services, such as custody service, wallet provider.

The document also sets out some additional requirements for crypto exchanges, trading platforms and cryptocurrency service providers that appear to be perfectly legitimate and understandable. These are, for example, rules concerning conflicts of interest, capital requirements, etc.

A big leap for the economy of the whole of Europe

This European Commission initiative aims to replace existing national frameworks applicable to cryptocurrencies not covered by existing EU financial services legislation. It is therefore a matter of legislation at continental level and the creation of a jurisdiction that may be the largest in the world.

In addition, the European Commission’s proposal could be another crucial thing for Europe. Thanks to these steps, Europe could acquire a single continental stock exchange with a European stock market, which is currently fragmented between DAX, FTSE Milan and many other national stock exchanges, which simply cannot compete with the New York Stock Exchange (NYSE).

It is very gratifying that the European Commission’s proposal is unexpectedly accommodating to innovations and cryptocurrencies, and instead of bans, the EC has set out to set clear rules. If the bill can actually be enforced and adopted, it would not only be a big step in digitization, but also a big step for the economy of the whole of Europe.

You might also like: 5 Things to Know Before Investing Into Bitcoin

All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.
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