This week, the European Union (EU) negotiators will meet in a final effort to agree on anti-money laundering measures and a new framework for approving cryptocurrency providers.
The EU cryptocurrency framework could change with meetings on Wednesday and Thursday, but there are still big questions about how to handle the Unchangeable Token (NFT), the impact of Bitcoin on energy consumption and the private use of unsecured wallets.
The first step will be to talk about a controversial money transfer rule, which would require wallets to find out who is involved in cryptocurrency trading. On June 29, EU officials will meet behind closed doors to complete the implementation of these proposals.
On 31 March, the European Parliament adopted a wide range of privacy policies. This was intended to prevent the use of digital assets for illegal drugs, child pornography or terrorism, which caused concern to the industry because it could slow down new ideas.
However, three people who took part in the talks with CoinDesk said that the round of talks planned for Wednesday will be the last. This suggests that the remaining legal disputes could be resolved by national governments sitting in the EU Council and members of the European Parliament. Both groups must agree on legal texts.
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How to categorize transfers to and from “unsecured wallets”, which are private ways to hold cryptographic assets that are not managed by an authorized service provider, is the most controversial issue and it is also the last thing that is resolved.
Supporters say the final language will hold the idea of verifying customer identities, but they acknowledge that this will not always be possible. The rest of the negotiations could be about details, such as the exact amount to be announced and whether or not both parties’ information needs to be made public.
On the second day, June 30, there will be another discussion on Markets in Crypto Assets Regulation (MiCA), which deals with this topic.
MiCA is the EU signaling regulation for cryptocurrencies. It requires publishers to sign up, create white papers with information for potential investors, and keep enough reserves for large-scale stablecoins. Many in the industry were happy with it because it would make it easier for cryptocurrencies to reach the huge EU domestic market of 450 million people.
According to a secret memo seen by CoinDesk, the French government believes that Thursday’s meeting will be the last. It is very likely the last chance from France to have the honor of completing the bill, as it will no longer be in charge of the Council after 1 July.
One important question is whether to expand the scope to include NFTs, which were left out in the first draft of MiCA 2020. Since then, assets such as Bored Apes have become more popular, and then scams such as laundry and pumping have become more popular. and an emissions system, where traders change prices to make a quick profit. Mistakes of this kind, which are already illegal in ordinary financial markets, are now getting the attention of the government.
France warns that EU MiCA rules could require NFT publishers to centralize and register.
Officials such as Peter Kerstens of the European Commission have said it would be “silly” to require NFT publishers to publish a white paper for each token. However, they have said that those who provide NFT wallets or brokerage services are similar to those who provide bitcoin services and should be subject to the law.
Even without the White Paper requirements, a larger rule might need to allow NFT markets such as OpenSea. This is something that MEPs are pushing for.
The French newspaper says the government is still considering enrolling all NFT service providers. Exceptions could be made for artists who offer wallet services for their own products and for marketplaces in small quantities, such as auction houses that only occasionally shop for NFT or game platforms for low value.
However, the addition of NFT is a cause for concern in the business world.
The head of the German Blockchain organization, Florian Glatz, said on Twitter on Wednesday: “This is a disaster. “The story does not end well.”
Marina Markezic, who works with Glatz at the European Crypto Initiative (Euci), believes that the NFT marketplace needs more protection to stop insider trading. “Of course we agree that there was pumping and garbage and terrible things happened in the NFT area,” she said.
But she stressed that it was “completely wrong” to copy and paste only financial market rules made for variable assets on the new NFT platform.
For example, one Tesla share is like any other, but each NFT is theoretically different and the stock exchanges where they trade could be diversified. So it is not clear how you would set for example rules for brokers to find the best price for their clients or restrictions on providing financial advice. Euci members say that counting NFTs as financial assets would unfairly separate them from their off-line counterparts, such as actual works of art.
Simon Polrot from Euci said: “We could look at a particularly healthy law” for some NFTs, but it would have to come after MiCA and differentiate between symbols related to cryptocurrencies and symbols that represent real things. “It does not mean to put all these things in the same category.
The damage that cryptocurrency mining causes to the environment is another MiCA problem. Lawmakers have already called for carbon-cutting measures, which the industry has said could lead to a ban on bitcoin. Fabio Panetta, Governor of the European Central Bank, has proposed imposing an additional tax on energy-intensive mining methods such as PoW.
Two people familiar with the talks say that it does not look like there will be such strict rules. Instead, the final wording is likely to make things clearer. This could mean, for example, that white papers need to talk about how the solidarity process affects the environment.
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Even after the policy framework has been finalized, it must be put in legal terms. Because MiCA will be phased in, it may not be used until 2024. Policymakers are already asking for follow-up to laws that do not answer many questions, such as how to handle decentralized finance.
Christine Lagarde of the European Central Bank told MEPs on June 20: “We hope you can also look at MiCA 2. She was asking for a new rule that would cover cryptocurrencies and lending, as well as activities where there are no intermediaries or traceable issuers. available.
After several rough months with EU crypto-legislation, this week’s talks may not be the end, but they could be the beginning of an end.
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