Regulatory Framework Set to Launch in Europe for Crypto Assets
The EU crypto market will brace for a new regulatory framework set to be implemented soon. This will place the region way ahead of other countries.
The crypto ecosystem is very complex, and many countries have been looking into regulating this sphere. The European Union has headed the world to make sure that crypto assets are adequately controlled.
The European Commission (EC) has announced a proposal named ‘Markets in Crypto-Assets (MICA).’ MICA is currently being vetted by lawmakers in the country. This move comes when the regulatory framework in the country regarding crypto has come under scrutiny over its lack of comprehensive coverage.
The MICA proposal
The EC has come up with a way of making sure that crypto assets not covered by the financial service firms in the country would be covered under the MICA. If the proposal is approved, it will regulate all crypto assets across the European Union.
One of the goals of the MICA is to give more definitions regarding crypto assets and how they are classified. This is a significant development that will help streamline the entire process regarding crypto in the region. The proposal has given a heavily detailed explanation about what crypto assets are, which will guide investors and stakeholders alike.
Crypto assets classified under the MICA
The MICA has provided a highly detailed explanation that every crypto asset listed on the proposal is one listed on the blockchain. However, the proposal will have to wait until it undergoes vetting by lawmakers to give a clear picture of the application’s scope for the regulatory framework.
The three major categories that the MICA has already defined will be in the proposal include:
- E-money tokens: these tokens derive value from an underlying fiat currency. E-money tokens can also be used as a means of exchange. Some assets that have been listed in this category include USDC coins, Libra 2.0, and others.
- Asset-referenced tokens: these derive a stable value from multiple underlying fiat currencies. These can also derive value from commodities and other crypto assets.
- All other crypto assets: this category will include all the other crypto assets not covered by the previous two definitions. Such assets will consist of utility tokens, stablecoins, Bitcoin, and other similar assets.
If the MICA proposal goes through, it will be the basis for which other countries will also formulate their crypto-asset regulations. It will also help achieve the objectives for which these regulations are developed, including market integrity, consumer protection, legal protection, and support for innovation.