Leaked EU Draft Proposes All-Encompassing Laws for Crypto Assets

Published on by Coindesk | Published on

A leaked version of rules to be issued later this month by the European Commission proposes an all-encompassing set of regulations covering the trading or issuance of digital assets across the 27-nation bloc.

Europe's Markets in Crypto-Assets draft legislation provides legal certainty around crypto assets - cryptocurrencies, security tokens and stablecoins - along the same lines as Europe's Markets in Financial Instruments Directive, a legal framework for securities markets, investment intermediaries and trading venues.

The takeaway is that Europe intends to treat crypto the same as any other regulated financial instrument, which will doubtless provide legal clarity.

The MiCA proposals begin with a broad definition of crypto assets and a base set of rules that apply to the issuers of those assets and service providers, more or less in line with the Financial Action Task Force definition of a virtual asset service provider.

Among the many regulatory obligations that will be imposed on crypto-asset issuers and service providers in the European Union is the need to be incorporated as a legal entity and for service providers to have their registered office in a Member State, Jones said.

The quid pro quo, Jones added, is the sort of regulatory clarity that will likely entice more institutional investment into the crypto space.

"By making crypto just like everything else in the traditional world, you make it easier for the traditional world to accept it," said Jones.

The 168-page set of draft rules, which Brussels said would come out in September, will not likely be transitioned into EU law until 2022 at the earliest.

Summing up, Jones said the new regulation will probably create something of a bifurcation of the crypto space.

"In a sense, crypto has benefited for much of the last decade from being largely in a grey area," she said.