As the rest of the crypto market gradually moves from the aftermath of the collapse Terra’s LUNA and USTRegulators around the world are becoming more and more skeptical about digital assets and the risks they pose to investors.
On June 30, the European Commission, members of the European Union (EU), and member states reached an agreement on a legal system to regulate the activities of players in the cryptocurrency market.
The proposed law, called the Crypto-Assets (MiCA) market, is “For unsubstantiated crypto asset issuers, so-called” stablecoins “, and exchanges and wallets that hold crypto assets. “
according to Announcement blog By the Council of the European Union
“The regulatory framework protects investors, enables innovation and promotes the attractiveness of the crypto asset sector while maintaining financial stability. Some member countries have already enacted national legislation on crypto assets. This makes the European Union clearer, but so far there has been no specific regulatory framework at the EU level. “
According to the announcement blog, the proposed MiCA aims to protect consumers. The law aims to “help protect consumers from some of the risks associated with investing in crypto assets and avoid fraudulent schemes.” Using MiCA, centralized and decentralized exchanges, DeFi protocols, crypto lending platforms, and other service providers to impose awkward obligations on crypto asset service providers is “if you lose an investor’s crypto assets. Responsible for. ”
According to the Council of the European Union, the proposed MiCA will also fix environmental issues related to cryptocurrency mining activities. The law says to players in the crypto ecosystemDeclare information on the environmental and climate footprint.. “
In addition, the European Securities and Markets Authority (ESMA) “develops draft regulatory technical standards for the content, methodology, and labeling of information related to the major adverse environmental and climate-related adverse effects.”
In addition, within the next two years, the European Commission will publish a report on the environmental impact of crypto assets. With this report, the Commission introduces “Mandatory Minimum Sustainability Criteria for Consensus Mechanisms, Including Proof of Work.”
Not so “unstable” coins
Noting the recent events that have plagued the stablecoin market, the council said the risks posed to holders of assets in these categories are increased without a regulatory framework.
With the proposed MiCA, stablecoin issuers will need to build a sufficient liquid reserve with partial deposits at a ratio of 1/1. Stablecoin holders will always be billed free of charge by the issuer. To strengthen regulatory oversight, the proposed MiCA ensures that Stablecoin is under the jurisdiction of the European Banking Authority (EBA). It must be in the EU before it can be operational by the publisher.