The European Union has completed its landmark full text of Crypto Asset Markets (MiCA) legislation. According to a leaked draft of the text, regulations regarding some altcoin projects are drawing attention. Presumably MiCA rules will apply to algorithmic stablecoins and fragmented NFTs.
MiCA sets rules for these altcoin projects
The European Union has completed its landmark full text of Crypto Asset Markets (MiCA) legislation. Officially, the text is still open to interpretation. However, the sources informed about the talks say that they are practically completed. A leaked draft of the September 20 bill shows EU practitioners taking a “matter-than-form” approach to the law. This means that the provisions may even apply to some assets classified as Non Fungible Toke (NFT).
As you follow on Kriptokoin.com, MiCA, once enacted, will require crypto-asset issuers to publish ‘white papers’ with technical roadmaps, stablecoin issuers to hold capital and be managed prudently for platforms to register with authorities.
Also, some altcoin projects that were out of scope when MiCA was first released in 2020 are now covered. The new draft also includes changes that could show how the EU might address algorithmic stablecoins. Algorithmic stablecoins such as USTC, MIM, FRAX, and USDN fall under regulation regardless of how the regulator plans to design the crypto asset, including a mechanism for maintaining stable value.
An earlier draft also sought to limit the issuance of stablecoins backed by asset reserves expressed in a ‘non-EU currency’ to ‘limit a minimum valuation or amount issued’, which the industry fears will block the popular US dollar. The new draft proposes changing this rule to apply to all issuers of asset-backed stablecoins, regardless of currency. Meanwhile, provisions regarding stablecoins are expected to come into effect by January 2024.
NFTs inside or outside?
NFTs are typically designed to have a unique digital identifier that cannot be copied, exchanged, or subdivided. But the rise of fragmented assets is getting some attention from regulators, as they can look a lot like traditional securities. NFTs such as CryptoPunks, Bored Ape Yacht Club, Azuki, Moonbirds may also be included.
The leaked draft, which surfaced at a series of technical meetings following a settlement on June 30, shows that MiCA does not apply to NFTs that are truly unique and cannot be exchanged with each other. “The issuance of crypto assets, exchangeable tokens in a large batch or collection should be considered as an indication of their interchangeability,” the final settlement text says, even if the issuer has given it a unique identifier.
The details of the provision caused concern in the industry. The full outline used can determine whether the regulation covers the majority of the NFT market in practice. When considering whether to regulate a particular asset, the text says, national and EU regulators should ‘take an approach on a form that should determine the nature of the asset in question, not its assignment by users’.
36145
