In what is defined as the most extensive regulatory framework for cryptoassets to date, a leaked EU draft document disloses that both issuers of cryptoassets and providers of similar actions will have to make important choices as they face what is established by industry experts as a “surge of regulatory obligations.”
The leaked document, titled Markets in Crypto-assets Regulation (MiCA), proceeded into considerable detail on how the EU needs to govern cryptoassets, with a distinct focus on fiat-pegged stablecoins.
XReg Consulting received a copy of the 167-page draft. This firm practices in digital asset regulations, which said in a commentary sent to CNWN that they expect the new rules to “shake up the industry” both inside the European Economic Area (EEA) and worldwide.
Firms that are affected need to “brace themselves for a wave of new regulatory obligations,” and therefore execute “important strategic decisions that will dictate the future success of their business,” the consulting company stated.
Similarly, listing on the draft document was the EU-focused news outlet EURACTIV, which announced that the definitive version of the record is anticipated to be presented “in the coming weeks,” making the EU the first principal jurisdiction to control cryptoassets.
And as per information gathered from EURACTIV’s record, stablecoins, pointed to in the document as “asset-referenced tokens” or “e-money tokens,” resemble to be an area of particular concern for the EU regulator, with far stricter oversight proposed than for other cryptoassets.
Stablecoins considered to be “significant,” will fall under the supervision of the European Banking Authority (EBA). In turn, the EBA will have powers to lead investigations, on-site inspections, and impose fines of up to 5% of the issuer’s annual turnover, EURACTIV’s report said.
Though, in terms of its full applicability, the suggested rules apply to far more players than just stable coin issuers. Instead, it refers to a broadly defined group called “crypto-asset service providers” (CASPs) and “issuers of cryptoassets,” which combined covers anyone who offers cryptoassets to third parties.
And as the draft states, anyone generating cryptoassets targeted at the EU market must present a white paper that needs to be accepted by both national and EU regulators before the issuer can start producing – a shift in policy that unquestionably will present a significant challenge for the industry.
Furthermore, Xreg Consulting said the proposed rules would harmonize crypto regulations across the entire European Economic Area (EEA) and “replace any national legal and regulatory regimes for cryptoasset activities.”
“An EEA-wide approach means that CASPs authorised in one Member State will gain access to the Single Market by passporting their services,” the firm added.
Until now, cryptoasset issuers have operated mainly in a regulatory gray area globally. It remains to be seen if major players in the industry will comply with the new regulations, and if not, what EU regulators will do about it.
Meantime, as reported in September, Japan’s top financial regulator, the Financial Services Agency (FSA), indicated that companies and organizations trading with cryptoassets and stablecoins needed to abide by strict anti-money laundering (AML) and anti-terrorism financing agreement protocols and advised that “new rules” could be introduced later in the year.
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