EU Crypto Rules Release Gets Delayed Until April 2023• February 25, 2023 11:05 am • Comments
The EU has been working on a set of crypto rules and guidelines, called the Markets in Crypto Assets (MiCA) regulation, in an effort to regulate the crypto industry in the entire region as a whole.
However, it has been revealed that the final vote on MiCA has been delayed until April of this year so some institutional investors may decide to not get involved in crypto until the rules are released then.
MiCA is quite unique given the fact that it is the first pan-European crypto framework and will likely be the foundation that is used to regulate all crypto for many years to come.
With that being said, it is clear that there will be many amendments to the rules as the years go on given that there is already uncertainty about the effectiveness of the rules after the FTX collapse or the TerraUSD collapse.
Whether or not these new rules and regulations will be more effective than how it is in the United States is still to be determined.
Will the EU's forthcoming MiCA regulations be enough to protect investors while giving businesses the clear markers they need to innovate? https://t.co/uQoE6eV1on
— Cointelegraph (@Cointelegraph) February 25, 2023
One main blindspot with regard to the MiCA is decentralized finance (DeFi). The current draft generally lacks any mention of one of the later organizational and technological forms in the crypto space, and it surely could become a problem when MiCA arrives.
That certainly drew the attention of Jeffrey Blockinger, general counsel at Quadrata. Speaking to Cointelegraph, Blockinger imagined a scenario for a future crisis:
“If DeFi protocols disrupt the major centralized exchanges as a result of a broad loss of confidence in their business model, new rules could be proposed to address everything from money laundering to customer protection.”
Bittrex Global CEO Oliver Linch also believes there is a global problem with DeFi regulation and that MiCA won’t make an exception. Linch said that that DeFi is inherently unregulatable and, to some degree, even a low priority for regulators, as the majority of customers engage in crypto mainly through centralized exchanges.
The one things many have noticed that is missing within the MiCA regulations is any reference to crypto lending or staking.
Back in the US, many of these staking or lending products have been accused by the SEC of being unregistered securities which resulted in the businesses being shut down or the products removed.
It is unclear whether or not this will also happen within the EU region as this would definitely lower the confidence of many investors within the industry.
On the other hand, too much regulation would also hamper the growth and innovation that needs to take place on the sector.
As a result, there is a huge debate right now on whether or not the government should just let it be a free market or not.
— People Over Profits (@Po_profits) February 20, 2023
At the end of the day, one shouldn’t get caught up in the stereotypes about the tardiness of the European Union’s bureaucratic machine.
It is still the EU, and not the United States, where there is at least one large legal document, scheduled to become a law, and the main effect of the MiCA was always much more important symbolically, whereas the urgent issues in crypto could actually be covered by less ambitious legislative or executive acts.
It is the mood of these acts, however, that remains crucial — the last time we heard from the EU it decided to oblige the banks storing 1,250% risk weight on their exposure to digital assets.
MiCA = EU Markets in Crypto-Assets (MiCA) 🇪🇺
"The one regulation to rule them all"🧙♂️
>380 pages of legislation.📚
Translated into 24 EU languages.🗣️
— Stefan Rottler (@stefan_rottler) February 15, 2023
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