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The MiCA could put Europe ahead in the crypto regulatory race
Feb, 01 2022
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As part of the European Commission's Digital Finance package, the MiCA framework was originally proposed in 2020. While it took until the end of 2021 for the proposal to be approved, the European parliament could ratify it as early as this quarter.
A recent report by
analytics company CoinShares indicates that the MiCA negotiations are likely to
conclude by midyear. If approved, MiCA could officially begin in summer 2024,
transforming the crypto industry for the better.
Crypto companies operating
in the EU could find the proposed EU digital asset bill to be a great relief for
their bureaucratic burdens.
Regulation of the
cryptocurrency market has been a hot topic for quite some time, but it wasn't
until last year that governments around the world started paying more attention
to it.
Some crypto and blockchain
companies have a decentralized and global nature, which makes it difficult to
adhere to local requirements. This is why the European Union's upcoming bill
will help.
MiCA is unique in the
regulatory space for a variety of reasons, including the fact that it
understands four types of digital assets for the first time. Another unique aspect
of this bill is its innovative way to deal with regulation in a fragmented
union like the EU.
Digital assets under the
proposed legislation are categorized according to four types: payment tokens, utility
tokens, asset-referenced tokens, and e-money tokens. The legislation will not
apply to CBDCs or security tokens, which are already regulated by the EU.
In addition to the ease of
doing business outside of the EEA, the bill also makes it easier for businesses
registered in an EEA country to expand to other regions of the region. However,
MiCA ignores the DeFi market.
There has been a massive decline in innovation in the crypto and blockchain space as more and more large markets such as Russia and India take the initiative to restrict the industry. The European Union is taking the initiative to try to regulate the industry, which is a positive development overall.
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Pavan A
CBW - External Analyst
INDIA
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