EU authorities are close to agreeing on a coordinated legislative package to comprehensively regulate crypto markets and related activities in Europe. Media reports indicate that agreement on key legislation could be reached as early as this month.
Agreement on EU cryptography legislation is expected at the end of June, officials say
Representatives of relevant European Union agencies are close to agreement on a crypto asset market (MiCA) proposal aimed at introducing union-wide rules for the crypto industry, Bloomberg reported, citing knowledgeable sources.
They chose to remain anonymous and revealed that the French President of the Council of the European Union and the European Parliament (EP) are optimistic about resolving the issues that are currently blocking the draft from moving forward. Negotiators should do so at two meetings to be held on June 14 and June 30.
According to sources familiar with the matter, the 27-strong bloc’s member states and parliaments are still divided on several aspects of the MiCA. These include the oversight of crypto asset service providers (CASPs), the possible inclusion of non-friable tokens (NFTs) in the framework, and the regulation of stablecoins.
Officials are still debating how to limit the use of stablecoins in payments. For example, there is a proposal to introduce a cap on transactions that are not denominated in euros. This comes after the collapse of the Terraud (UST) algorithm stablecoin last month that affected the crypto market. Ensuring investor protection and measuring the impact of cryptocurrencies on financial stability are two other major considerations.
Discussions on key aspects of crypto regulation continue
The MiCA, first presented in 2020, was approved by the EP’s Economic and Financial Committee (ECON) in mid-March this year. The package will enter the so-called trilogue phase of the European legislative process at the end of the same month, during which the final draft will need to be reconciled between the EP, the Commission and the Council of the European Union.
An important element of the negotiations is also the need to address the environmental impact of crypto assets, which some MEPs argue that the new legislation should take into account. A provision banning energy-intensive proof-of-work mining has provoked a backlash from the crypto community on the Old Continent, as it is the equivalent of a ban on bitcoin. The controversial text was removed from the draft. France, which now holds the EU presidency, appears ready to accept the European Commission’s proposal to disclose CASP’s energy consumption.
EU member states and the EU Parliament are also discussing the inclusion of anti-money laundering provisions in cryptography legislation. National governments are pushing for separate rules, while the European Parliament has proposed establishing a list of non-compliant CASPs.
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