The authorities in the European Union are edging closer to reaching a deal on the legislative framework that is tailored to help regulate the crypto market and blockchain-related activities in the giant economic block. An agreement might be reached as early as this month, according to media reports.
Deal on MiCA Might be Reached by the end of June, Media Sources Say
The representatives of different institutions in the E.U. are nearing a consensus on the proposed crypto laws, Markets in Crypto Assets (MiCA), targeting to introduce comprehensive rules for the entire economic bloc, reported Bloomberg.
Opting to stay anonymous, the sources indicated that the French Presidency of the E.U. Council and the E.U. Parliament is optimistic about solving the main issues. Negotiators will be able to draw a draft in the upcoming meetings on 14th June and 30th June.
The E.U. has a membership of 27 nations, and the E.U. parliament has disagreed on different aspects of MiCA. The most notable areas of contention are supervision of crypto asset providers, the inclusion of non-fungible tokens (NFTs), and how to regulate stablecoins.
Discussions are still ongoing on the model to use for limiting the stablecoins. Some have suggested the need to introduce a ceiling for transactions not denominated in Euros. This consideration is coming hot on the heels of the collapse of the terraUSD (UST), an algorithmic stablecoin, which greatly impacted the crypto markets. The two primary considerations for the legislation are:
- Protecting investors.
- Assessing the impact of cryptos on financial stability.
The Discussions of the Main Crypto Regulatory Components to Continue
MiCA, which was first proposed in 2020, got the approval of the European Parliament Committee on Economic and Monetary Affairs (ECON) in March of this year. The package has now reached the trilogue stage, where it has to be coordinated between the E.U. Commission, E.U. Parliament, and the Council of the European Union.
One important component of the negotiations is the target of addressing the environmental impact of crypto assets, which some lawmakers insist the new legislation should also factor in. proposals to ban proof of work (POW) mining attracted sharp criticism from the crypto community, which indicated it amounted to banning Bitcoin. This controversial part was removed by the commission.
The E.U. Members and the Union’s legislature are also working on including anti-money laundering clauses in MiCA. Most national governments are advocating for separate rules while E.U. lawmakers target non-compliant crypto asset service providers (CASPs).