EU Reaches Provisional Deal on Cryptography and Digital Assets Directive

On June 30, 2022, the European Union (“EU”) reached a landmark agreement on a Crypto-Asset Marketplace (“MiCA”) Directive, intended to provide common rules to regulate the crypto-asset market. digital cryptocurrencies in the 27 member countries. EU state bloc. The provisional agreement brought together the agreement of the European Parliament, the European Council and the European Commission.

We recently reported on US developments in crypto/digital asset market regulation (see, Bipartisan Senate Bill to Introduce Crypto/Digital Assets; US Executive Order Issued to Expand Crypto Asset Regulatory Framework /digital, both available at Kurtin SARL Information Technology and Internet). With MiCA, the EU is moving in several different innovative directions from the US direction. Among the provisions of the MiCA are:

Surveillance and protection of consumers and investors

  • The European Securities and Markets Authority, or “ESMA,” will be responsible for the regulatory authority and oversight of crypto-assets and crypto-asset service providers (“CASPs”), and a new framework will be established to regulate public offerings and trading in crypto-assets that are not currently regulated by existing financial services legislation, including benchmarking assets (stable coins, tokens and asset-backed certificates) and e-money digital tokens, and guaranteeing the market integrity, including transparency, disclosure and authorization (compared to the United States, where the proposals would divide regulatory oversight of crypto-assets between the United States Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”)).
  • Provisions to prevent money laundering, the use of digital tokens and coins for terrorist financing and market manipulation measures will be included in the directive.
  • Improved transparency and disclosure for consumers and investors about the risks, costs and fees of buying and trading crypto-assets.
  • Non-Fungible Tokens (“NFTs”) of any kind, offered at a fixed price (i.e. not used for trading) will at least initially be exempt from the MiCA regime. Interestingly, the handling of NFTs was a major sticking point in the MiCA negotiations.

Energy and Environment

The MiCA requires significant CASPs to disclose the energy consumption and environmental impact of listed crypto-assets. ESMA will be responsible for preparing technical standards to provide guidance to the market on how this information will be implemented. CASPs will be responsible for publishing environmental and climate impact data in accordance with ESMA disclosure standards on their websites

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