EU to refine cryptocurrency regulation bill in June

On 30 June 2022, the European Parliament, the European Commission, and the Council of the European Union will hold the final trilogue on the proposed regulation of cryptocurrencies MiCA. This was stated by Patrick Hansen, growth manager at Unstoppable Finance.

2/ First, the landmark MiCA bill.

The last & concluding political trilogue meeting between the three main EU institutions (Council/Parliament/Commission) will be next Thursday on June 30.

Almost all big issues have been agreed upon. A few open topics remain:

— Patrick Hansen (@paddi_hansen) June 25, 2022

He stressed that all ‘important’ issues have already been agreed upon, but a few open topics remain.

The European Commission wants to include NFTs within MiCA’s scope, arguing that it is necessary to protect consumers. The Council of the EU and the European Parliament initially opposed, but Hansen says they have now conceded.

“The likely outcome will be a compromise — token issuers will be exempt from MiCA, but companies (marketplaces and so on) providing NFT-related services will be required to comply with the law. They will need a CASP licence (small players perhaps, not).”

Hansen noted that lawmakers do not intend to make exemptions for algorithmic stablecoins. For issuers of EMT and ART, high regulatory requirements will be set, and CASP will be prohibited from paying interest on deposits in ‘stablecoins’.

Within the framework of the “trilogue”, it remains to define ‘significant’ stablecoins and to approve the architecture of oversight for the sector.

He also stated that the DeFi sector was not included in MiCA’s scope. In 2023, the European Commission will publish a separate report on this issue and will launch a pilot project for a new form of “embedded supervision of DeFi”.

It is envisaged that all CASP will be required to disclose information about each crypto asset they handle. The data list will be approved by the European Securities and Markets Authority (ESMA).

In Hansen’s view, officials also need to define anti-money laundering and counter-terrorist financing provisions, exact regulatory frameworks, and timelines for implementation.

“Then, before MiCA comes into force, there will be a vote on the concluded compromise in the Parliament’s plenary,” he explained.

In March 2022, the European Parliament supported amendments to the regulation on information exchange between counterparties, which envisage collecting data on users of non-custodial cryptocurrency wallets.

The de minimis principle does not apply to transfers of digital assets, so all transfers, except P2P transactions, fall under the Transfer of Funds Regulation (TFR).

Hansen explained that the European Parliament supports mandatory identification of non-custodial CASP counterparties when conducting transactions. He noted that the Council of the EU and the European Commission oppose such a decision.

“Instead, the Council proposes a risk-based approach, in line with Germany’s requirements, where CASP must assess money-laundering risks based on blockchain analytics and take corresponding measures to mitigate them depending on the outcome,” he wrote.

He stressed that, unlike MiCA, work on amendments to the TFR may not be finished in June, as the European Parliament is unwilling to back down from its demands.

Earlier in April 2022, representatives of the cryptocurrency industry urged the EU to abandon tougher regulation.

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