The European Union is preparing to implement MiCA, a set of sweeping regulations that could drastically reduce the cryptocurrency industry in the region.
The European Union’s cryptocurrency markets (MiCA) bill was finalized in September. European Parliament officials voted 28 to 1 in favor of the legislation in October and a final vote must pass.
The bill covers everything from stablecoins to cryptocurrency mining, from non-fungible tokens (NFTs) to money laundering. However, there are also clauses buried within it that could affect crypto influencers.
On 1 November, Patrick Hansen, Circle’s director of EU policy and strategy, pulled out one of these clauses. According to the small print, crypto influencers who comment on social media without disclosure could be in trouble. If they are believed to profit from the effects of their actions, it will be considered market manipulation in the EU once the MiCA is in place, he noted.
The big cleanup of EU cryptocurrencies
Terminology is vague but may include memes like Elon Musk’s Doge-Twit Image who went around. The reaction was mixed with some questions about why the same rules didn’t apply to other assets.
However, those in favor said there should be more transparency from crypto influencers and coin flag-wavers.
How it will be monitored and enforced is also unclear. However, what is evident is that the EU is about to make things much more difficult for the cryptocurrency industry and all the people associated with it.
Regulators are confident this is a step forward that will make the region more attractive to the cryptocurrency industry. On November 2, MiCA speaker Stefan Berger said that these regulations are necessary if “Europe wants to be a major player in the cryptocurrency game”,
MiCA under the microscope
MiCA is giving in hard to DeFi in the name of consumer protection. However, this could simply turn it into TradiFi, centralizing and controlling all aspects of the industry.
It also aims to regulate stablecoins and their issuance and cryptocurrency service providers (CASP). This would pave the way for fully regulated exchanges and brokers and could prevent fraudulent activity.
The bill introduces three sub-categories of cryptocurrencies. These are based on the token trying to stabilize its value in relation to other assets.
It is also touting the consumer protection card, but the real rationale behind the MiCA is the prevention of money laundering. To do this, it aims to align the regulations of crypto companies with the same framework that governs banks. MiCA is unlikely to become law until 2024.
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