Regulatory overview – Crypto debate in the EU stagnates…

Crypto regulation in the EU: trilogue stagnating

In the European debates about the appropriate handling of cryptocurrencies, the trialogue is on the train. The joint body of the EU Commission, Council and Parliament must discuss the regulatory proposals that have previously been drawn up by parliamentary committees. But in the past week, these negotiations have come to a standstill. Disagreement prevails at the Transfer of Funds Regulation, a package of measures against money laundering and terrorist financing that is also not well received in the crypto community. The regulation includes a paragraph that is expected to lead to the ban of unhosted wallets, which are of fundamental importance for DeFi services. While Parliament insists on the clause, the member states in the EU Council are pushing for its deletion. Such a ban is unworkable. The fronts harden, the Commission plays the unsuccessful mediator.

Negotiations on the comprehensive European MiCA crypto regulations also made no progress last week. The reason here, however, was the Covid 19 infection of a participant, because of which the round of talks on May 18 did not meet. There is also disagreement in the trialogue at MiCA. On May 16, the EU Council took a position on a number of discussion points. The representation of the member states calls, for example, to exclude NFTs from the regulations. A separate law is to be drawn up for these tokens. Furthermore, the Council does not want to leave the monitoring of large BTC exchanges and comparable service providers to the European stock exchange supervisory authority. National authorities are asked instead. The EU Commission has already expressed dissatisfaction with some of the proposals. Meanwhile, experts have criticized the EU’s stablecoin plans.

BaFin calls for pan-European DeFi regulation

The fate of decentralized financial services in the EU depends on the right decision in the Transfer of Funds Regulation and consequently hangs by a thread. Nevertheless, there are voices from Germany dreaming of a comprehensive DeFi regulation. Because Birgit Rodolphe, executive director for processing and money laundering prevention at the Federal Financial Supervisory Authority (BaFin), calls in an article of May 16 an “innovative regulation” in this area. The expert describes the potential of DeFi services, but at the same time warns of the risks of a lack of regulation. Rodolphe considers an EU-wide set of rules to be the preferred solution, because this is the only way to prevent a divided market.

Binance applies for crypto custody license in Germany

The BTC Exchange binance continues to work on its own rebranding. If the crypto hub was once considered a scare from the authorities, the company is now trying to gain acceptance from the official bodies. As binance CEO Changpeng Zhao announced at a conference in Hamburg that his crypto exchange is now aiming for a German crypto custody license. Discussions with the authorities are in progress. “Based on my team’s feedback, things are going well,” Zhao added. If the plan works, Binance would be the fifth company allowed to store crypto assets in Germany with the blessing of BaFin.

El Salvador invites banking authorities to the BTC conference

El Salvador was the first country in the world to declare BTC its national currency. So it seems understandable that President Nayib Bukele sees himself as a crypto ambassador. From this role, Bukele invited delegations from 32 central banks and 12 supervisory authorities from a total of 44 African, Asian and South American countries to a conference on May 17th. In addition to BTC, financial inclusion and digital economies were also on the agenda. BTC Beach published via Twitter photos after which guests queued up to set up BTC wallets.

Russia is considering legalizing cryptocurrencies as a means of payment

A year ago, observers considered it completely impossible that Russia of all countries could follow in El Salvador’s footsteps. However, the war of aggression against Ukraine and the subsequent Western sanctions imposed seem to have caused a certain rethink. According to Reuters Industry and Trade Minister Denis Manturov announced on May 18 that cryptocurrencies would soon be legalized as a means of payment. The central bank and government would therefore work together on this project. A Russian crypto law from 2020 also explicitly banned the acceptance of BTC and Co. as a means of payment.