Leaked proposals from the European Union show plans for a new set of rules for the digital currency and other digital assets, in a move that could reshape the industry across the bloc.
The draft Markets in Crypto-Assets (MiCA) legislation will operate in a similar way to the Markets in Financial Instruments Directive (MiFID) for securities, providing legal certainty for digital assets like digital currencies, stablecoins and security tokens.
The proposed law will see digital currency regulated in a similar way as other regulated financial instruments, effectively equalizing the legal framework for digital assets.
Siân Jones, senior partner at XReg Consulting, was quoted by CoinDesk saying the definitions of tokens in the proposals would classify stablecoins as asset-reference tokens, rather than e-money tokens, specifically targeting them for regulation within the scope of the new measures.
“Those stablecoins that rely on a basket of currencies or are based by reference to other assets, whether that’s another crypto or other kinds of assets, they will be classed as asset-reference tokens,” he said, according to the report. “Essentially, the subgroup that behaves like e-money will be sucked into the existing e-money framework, while those that are asset-referenced have a load of extra rules on top of the base rules. So clearly, this is targeting stablecoins and particularly global stablecoins.”
According to Jones, the increased regulatory clarity inferred from the draft proposals will make digital assets more attractive to institutional investors.
“By making crypto just like everything else in the traditional world, you make it easier for the traditional world to accept it. I would probably say from the draft that it will favor the banks and traditional investment firms. The incumbents will have an advantage in a number of respects, which I’m sure is not the intention, but that will be the short- to medium-term impact.”
“In a sense, crypto has benefited for much of the last decade from being largely in a grey area. But now you have a very clear set of rules – and you are either in or outside it.”
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