Introduction Crypto legislation is here, at least in the European geography. The European Union (EU) Parliament has passed the crypto legislative package with a majority vote. What will its impact be on the crypto industry? While there has always been much anticipation around the legality and regulations of cryptoassets, the world is finally taking a […] The post EU Parliament Approves Crypto Legislative Package By Majority Vote appeared first on ZebPay | Buy Bitcoin & Crypto.
Crypto legislation is here, at least in the European geography. The European Union (EU) Parliament has passed the crypto legislative package with a majority vote. What will its impact be on the crypto industry?
While there has always been much anticipation around the legality and regulations of cryptoassets, the world is finally taking a step ahead as various nations acknowledge crypto’s presence and its rising popularity. Earlier this month, the EU Parliament’s Committee on Economic and Monetary Affairs (ECON) passed the crypto legislative package called the Markets in Crypto Assets Regulation (MiCA) legislative package. MiCA’s primary objective is to facilitate a regulatory process in the crypto industry for the EU.
EU Approved Crypto Legislative Package
Winning by a majority of 31 versus 23 votes, EU Parliament approved MiCA to create a uniform regulatory framework that encompasses all crypto-assets in the EU. This crypto legislation aims to protect consumers against potential market manipulation and financial crime while supporting the future of the crypto space and any innovations therein.
By branching out the regulation to cover crypto assets, the EU envisions reducing its carbon footprint by 2025 due to proof-of-work and mining activities.
While most cryptoasset blockchain platforms are moving to a proof-of-stake mechanism, some still follow a proof-of-work mechanism that needs exceptionally high energy consumption levels to operate, thereby resulting in a negative impact on the environment.
The proposal to ban proof-of-work cryptoassets was rejected. All crypto assets are now required to adhere to the EU’s “minimum environmental safety standards” to make crypto more sustainable in the long run.
The proposal would have directly impacted Bitcoin and Ethereum, but Ethereum is moving to a proof-of-stake mechanism soon.
However, further drafts are expected to come up, with rules for sustainability, that all crypto assets will have to follow.
Boost Users Confidence
By having regulations in place for the safety of crypto investors, the crypto legislation aims to further increase the popularity of crypto once there is a set process in place. This would help investors understand recovery channels in case of crypto thefts or other cyber attacks.
Regulation will also remove all doubts surrounding crypto investments and enhance the development of digital currencies as a feasible alternative to payment or investment options.
Transparency, Disclosures, and Authorisation
While the crypto community claims to be entirely transparent, a regulatory authority in place will keep transparency matters uniform. There will be standard disclosures needed for the safety of individuals.
The regulations will also encourage more transparency regarding the risks involved, costs incurred, and any hidden charges. The regulations aim to bring market integrity and overall financial stability by adding credibility to public offers.
The regulations will also help eliminate crypto accusations about market manipulation, supporting criminal activities, terrorism financing, and money laundering.
Crypto assets were meant to be a decentralised platform, eliminating the need for intermediary intervention and control; whether the regulations will curb the freedom that crypto offers is yet to be seen.
A regulatory authority like the European Securities and Markets Authority (ESMA) could be deployed to supervise the asset-referenced tokens issued in the market, and the European Banking Authority (EBA) would supervise the electronic money transfers. This is to assess the viability of tokens issued and protect the interests of investors while fulfilling all of the aims mentioned above for more robust market stability.
What MEPs (Members of European Parliament) Say
Stefan Berger: “By adopting the MiCA report, the European Parliament has paved the way for an innovation-friendly crypto-regulation that can set standards worldwide. The regulation being created is pioneering in terms of innovation, consumer protection, legal certainty, and the establishment of reliable supervisory structures in the field of crypto-assets. Many countries around the world will now take a closer look at MiCA.”
Pierre Person: “MiCa also refers to NFTs. Only NFTs that are not listed on an exchange are considered outside the scope of crypto-assets. An NFT representation of a sword in a video game will therefore be governed in the same way as an asset by a market authority. MEPs have taken a hard line on crypto-assets, thinking they are protecting citizens. In reality, this version is mortifying for our competitiveness while, at the same time, President Biden has signed an act calling for the US to fully embrace this new ecosystem. Parliament is transposing old-world financial regulation to a structurally different new technology. Once again, we are leaving opportunities to others while boasting of having a good regulation.”
While the crypto legislative package intends to merely create a system for consumer protection and financial stability, how these regulations impact the crypto-assets and their decentralised nature remains to be elucidated. Stay tuned to ZebPay for more such updates!
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