The European Union’s (EU) executive branch has now laid out its plans to create an extensive framework for digital assets. Since the rise of the crypto sector, many governments and authorities have been seeking ways and means to control and govern how the nascent industry operates.
But, due to the decentralized nature of most of the projects in the industry, it has become quite challenging for authorities to control cryptocurrencies. Confirming to reports last week, the European Commission on September 24, 2020, proposed legislation that will turn cryptos into a regulated financial instrument.
Many crypto proponents are somewhat worried that such control by the governments and other authorities will reduce the attractiveness of the nascent industry as an investment tool. But, with such regulations, more institutional investors will come in which will help the crypto space to grow to the next level.
The bill dubbed the “Regulation on Markets in Crypto Assets” (MiCA), which will offer clarity on what makes up a ‘crypto-asset’ and it also defines different token subcategories. It will offer rules on digital asset custody together with capital requirements. The bill will also stipulate the relationship that exists between the token issuer and holder and includes procedures for investors to file complaints against projects.
Officials also want a regulatory sandbox initiative for firms creating an infrastructure for the trading and settlement of digital assets. The MiCA, if passed, will turn the EU into the biggest and most considerable regulated space for cryptos globally. The framework will apply in all 27 member states, providing regulated crypto firms passporting rights all through the entire bloc.
Based on the concerns expressed by five European finance ministers recently, the commission has also warned that the stablecoin issuers might be subject to more strict regulatory checks.