Regulation on Markets in Crypto Assets

Regulation on Markets in Crypto Assets

The european Commission yesterday adopted a new Digital Finance Package, including legislative proposals on crypto-assets . The ‘Regulation on Markets in Crypto Assets' (MiCA) will:

. . . boost innovation while preserving financial stability and protecting investors from risks. 

by a strange coincidence they have chosen the same accronym for these regulations as for an interception missle. MICA – Missile d’Interception, de Combat et d’Autodéfense» Could they be concerned about the instability of the Euro and the potential for the disruption of the financial system by blockchain technology (in particular its use to create 'Global stable coins')?

The text of the proposal for a regulation on markets in crypto assets can be found here:

https://ec.europa.eu/finance/docs/law/200924-crypto-assets-proposal_en.pdf

The timing of the legislation could not be more crucial as its objective is nothing less than to aid the EU’s economic recovery, presumable from the corona virus, although it is not explicitly mentioned. The aim is to regulate the transfer of digital assets within EU to prevent market fragmentation, whereby the rules are at odds in different states. The belief being that with legal certainty will come a growth in the market for crypto assets and a new era of funding for European businesses, large and small.

It is essential reading for anyone planning:

the custody and administration of crypto-assets on behalf of third parties;

 

the operation of a trading platform for crypto-assets;

 

to mint digital coins which are not ‘asset-referenced tokens’ or ‘e-money tokens’

 

to provide advice on crypto-assets;

Some facts which are pertinent in the section regarding Asset-referenced tokens (article 15), such as the type which Elements Energy will be issuing:

Where the annual turnover of asset-referenced tokens does not exceed 5 Million Euros there is an exemption from the need to be authorised by the National Competent Authority (NCA) of their home EU Member State

Where the assets are sold toqualified investorsand transfer to other types of investor are not permitted an exemption from authorisation also applies

In any case issuers will need to produce a ‘crypto-asset white paper’ whose content is prescribed in article 17.

Speculators at the fringes of the regulatory scene have estimated that such legislation may take 2 to 4 years to become a reality. The corona epidemic has precipitated an unprecedented existential panic in the global economy. The shear enormityof the- quantitative easing -called upon by the central bankers to sustain a common belief in business-as-usual has led others to question; is there not a better way? Is it possible that standard political protocol could be overtaken by the very events they are attempting to coordinate?

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