The European Council will form a three-year mandate to negotiate with the European Parliament and work on creating a regulatory framework for the cryptoasset market.
The European Union Cryptocurrency Regulation (MiCA) Bill is designed to protect investors and consumers from fraud. It provides guarantees that investors’ money will be safe in the event of a hack.
If the authorities consider that specific virtual currency exchange platforms pose a threat, they can ban them in accordance with the MiCA. Another main goal of MiCA is to manage the issuers of the stemcoins, prompted by Facebook’s intention to create the Libra (Novi) stemcoin, which allegedly threatens the financial stability of the European economy.
The European Central Bank (ECB) said the new rules will set standards for payment service providers to ensure the safety of users. The framework will contain provisions related to corporate governance and risk management, bans on the provision of services such as high-risk payment instruments.
A number of exceptions have been made to the document. The Council agreed that for asset-linked tokens permitted under the EU Capital Requirements Directive “no further authorization is required under [MiCA]”. According to the MiCA, banks and other financial institutions that provide settlement services for stemcoins should be exempted from capital requirements.
Non-fungible tokens (NFTs), including digital art and collectibles that are valued against the distinctive characteristics of each cryptoasset, are not subject to MiCA rules.
The European Cryptoasset Markets Bill was released in September 2020 as part of a larger digital finance initiative.
