In what is pronounced as the most comprehensive directing framework for cryptoassets to date, a trickled EU draft document reveals that both issuers of cryptoassets & providers of associated activities will have to make crucial choices as they face what is described by industry specialists as a “wave of regulatory obligations.”
The trickled document, titled Markets in Crypto-assets Regulation (MiCA), went into great detail on how the EU desires to regulate cryptoassets, with a particular focus on fiat-pegged stablecoins.
A copy of the 167-page draft was gotten by XReg Consulting, a firm that focusses in digital asset regulations, which held in a comment sent to Cryptonews.com that they expect the new regulations to “shake up the industry” both inside the European Economic Area (EEA) & around the world.
Affected firms require to “brace themselves for a wave of new regulatory obligations,” & hence make “important strategic decisions that will dictate the future success of their business,” the consulting company held.
Similarly reporting on the draft document was the EU-focused news outlet EURACTIV, which held that the final form of the document is expected to be presented “in the coming weeks,” making the EU the first primary jurisdiction to control cryptoassets.
Rendering to EURACTIV’s report, stablecoins, denoted to in the document as “asset-referenced tokens” or “e-money tokens,” appear to be an area of particular concern for the EU regulator, with far stricter oversight proposed than for other cryptoassets.
Stablecoins that are deemed to be “significant,” will fall under the supervision of the European Banking Authority (EBA). The EBA will, in turn, have powers to conduct investigations, on-site inspections, & impose fines of up to 5% of the issuer’s annual turnover, EURACTIV’s report said.
In terms of its full applicability, however, the proposed rules apply to far more players than just stablecoin issuers. Instead, it refers to a broadly defined group called “crypto-asset service providers” (CASPs) & “issuers of cryptoassets,” which combined covers anyone who offers cryptoassets to third parties.
And according to the draft, anyone developing cryptoassets targeted at the EU market must produce a white paper that needs to be approved by both national & EU regulators earlier the issuer can start operating a change in policy that undoubtedly will present a significant challenge for the industry.
Moreover, Xreg Consulting said the proposed rules would harmonize crypto guidelines across the whole European Economic Area (EEA), & “replace any national legal & regulatory regimes for cryptoasset activities.“
“An EEA-wide approach means that CASPs authorized in one Member State will gain access to the Single Market by passporting their services,” the firm furthered.
Up till now, cryptoasset issuers have primarily operated in a regulatory gray area globally, & it relics to be seen if major players in the industry will comply with the new regulations, & if not, what EU regulators will be able to do about it.
In the meantime, as reported in September, Japan’s top financial regulator, the Financial Services Agency (FSA), hinted that companies & organizations dealing with cryptoassets & stablecoins required to abide by strict anti-money laundering (AML) & anti-terrorism financing compliance protocols & suggested that “new rules” could be introduced later in the year.
Meanwhile, a new white paper by international law firm Perkins Coie claims that regulated financial institutions can ensure compliance with AML obligations when supporting privacy tokens.