the legislator tries to take into account the fast changing of the digital assets. Thereby, Mica should allow regulators frameissuance of algorithmic stablecoins and a little NFT.
In early September, the rapporteur for the European Digital Assets Regulation Act announced that: Mica should be ready in October. The schedule drawn up by Stefan Berger must be respected.
CoinDesk was able to access a draft of the text of the future regulation dated September 20. And if the document remains open for comments, it would be: actually completed. l’Europe is therefore taking a new step in the management of the cryptocurrency.
More flexible legislation to prevent obsolescence
The legislator also seems to have wanted to take into account the rapid innovation on this market. When MiCA’s work began, NFT and algorithmic stable coins were emerging themes, for example.
Since then, they have grown in importance. The risk for the European authorities is therefore to regulations probably outdated very quickly. The challenge, therefore, is to rely on a text that plenty of room for interpretation.
This approach to the law favors substance over form, allowing it to apply to new assets, some of which are considered NFTs. Initially, non-replaceable tokens were not intended to be covered by MiCA.
However, our American colleagues report that the rise of split assets shuffle the cards. These consist of a set of fungible tokens containing a . represent NFT. And if they’re of interest to regulators, it’s because these tokens can be similar to: financial securities.
NFTs reclassified as fungible and therefore regulated tokens
They would therefore be regulated through the provisions defined in MiCA. As a result, “the issuance of crypto-assets in the form of non-replaceable tokens in a large series or collection should be considered as an indicator of their fungibility,” the draft now specifies.
The assignment of a token unique identifier is not sufficient to exempt it from the regulations being developed. So how can we distinguish between NFTs that do and do not fall under MiCA? It is up to regulators, national or European, to determine this.
It is up to these authorities, through an analysis of the asset’s characteristics, to determine its actual classification. It is this analysis that will impose itself on the “designation by the users”. The issuer of these tokens cannot hope to escape MiCA by simply designating it as an NFT and attributing some of its peculiarities to it.
Dollar, Euro or Algorithmic Stablecoins: Same Rules
In addition to non-fungible tokens, and their variants, Europe is interested in: stable coinsof the type algorithmic. The latter had an eventful year 2022. Their operation is also criticized. Rather than guaranteeing value stability, these tokens may be subject to high volatility.
The legislator also wants to draw lessons from the past by considering a TerraUSD scenario. The algorithmic stable coins therefore find their place in the MiCA regulations.
[Les stablecoins sont régulés] regardless of how the issuer plans to design the crypto asset, including the mechanism for maintaining stable value,” the text reads.
On the other hand, the legislator seems to have raised the concerns stablecoins denominated in a currency other than the euro. The original plan was to restrict issuance of these tokens, which would have ruled out stable benchmark coins like USDC. Now the text clarifies that MiCA applies to stablecoins regardless of the associated currency.
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