The European Union has agreed on a set of new rules that will regulate the cryptocurrency industry, whose decline has been causing investors to lose millions. Because of this, calls for tighter scrutiny have sparked worldwide.
EU's MiCA for Crypto
According to Engadget, EU negotiators released the final details for a provisional agreement on June 30 on a sweeping package of crypto regulations to be followed by the EU's 27 nations. The provisional agreement is called Markets in Crypto Assets (MiCA).
The EU's new crypto rules will ensure a "harmonized market, provide legal certainty for crypto-asset issuers," It is also meant to guarantee a level playing field for all service providers. The rules will also ensure high standards for consumer protection.
The new crypto law provides issuers of crypto assets and providers of related services a way to serve its clients across Europe from a single base while still meeting the capital and consumer protection rules.
Just like the EU's data privacy policy, and its recent law targeting harmful content on digital platforms, the new crypto rules are expected to be highly influential worldwide.
Patrick Hansen, the crypto venture adviser at Presight Capital, told The Washington Post that the new EU rules are the first comprehensive piece of crypto regulation in the world.
Hansen said that he believes there will be many jurisdictions that will look more closely into how Europe deals with crypto issues. He expects authorities from smaller countries that don't have the resources to introduce their own rules to adopt ones similar to the EU.
Protecting Crypto Investors
Under the new regulations, exchanges, brokers, and other crypto companies will face strict rules to protect consumers.
All companies that are issuing or trading crypto assets like stablecoins face transparency requirements requiring them to give detailed information on the risks, costs, and charges that consumers may face.
The new EU rules will also help novice crypto investors avoid falling victim to scams and frauds. Regulators have warned that scams and frauds have become widespread in the industry in the past couple of years.
The providers of Bitcoin-related services would fall under the new EU rules, but not Bitcoin itself, which is the most popular cryptocurrency in the world right now. However, as of November 2021, Bitcoin has lost more than 70% of its value.
Concerns About Crypto's Carbon Footprint
In order to address the concerns about the carbon footprint left by Bitcoin mining, crypto companies will have to disclose their energy use and display information online about their environmental and climate impact.
Bitcoin mining guzzles massive amounts of electricity for computer processing to record and secure transactions as proof of work.
However, negotiators exempted non-fungible tokens, or NFTs, which have become a hot topic over the past year.
CNBC reported that, unlike cryptocurrencies, the digital assets, which can represent artwork, sports memorabilia, or anything else that can be digitalized, are unique and sold at a fixed rate.
However, it left the room to reclassify them later as a crypto assent under MiCA or as a financial instrument.
The new European rules aim to maintain financial stability, a growing concern for regulators amid the recent crypto-related declines.
This article is owned by Tech Times
Written by Sophie Webster
