European Union (EU) officials want to add NFTs to the Cryptoasset Markets Act.
The MiCA Act of the European Union sets the rules for the regulation of the bitcoin ecosystem and all other altcoins.
The law is intended to start operating next year and several industry communities believe that the law has positive aspects, but they also see several negative factors that a priori seem to add obstacles for the ecosystem to grow.
Currently, the Green Party and socialist representatives want to add NFTs (non fungible tokens) to the MiCA law, since these digital assets had not been included in the regulation. Also, they proposed other industries of the ecosystem that they want to add to the Law, the same are: DAOs (decentralized autonomous organizations) and hardware wallets or cold wallets.
In relation to cold wallets, they seek to ensure that transfers between exchanges to wallets and vice versa have to go through regulatory bodies.
The MiCA will have to be approved by the Economic and Monetary Affairs Committee (ECON) to become effective after 18 months.
With respect to non-fungible tokens, lawmakers want NFTs trading platforms to be subject to established EU anti-money laundering (AML) regulations.
It has been announced that individuals, brands, organization or companies that want to launch an NFT collection must receive express authorization from the EU before offering their services.
The official press release from the European Consulate spoke to NFTs and they said that NFTs representing art, music and videos, among other digital assets, will be excluded from the scope, except, if included in the categories listed in the MiCA Act as existing cryptoassets.
The deadline for submitting and admitting these NFTs will be 18 months by the European Commission which will be tasked with preparing an assessment and, if deemed necessary will also make a project-specific legislative proposal. The objective is to address the emerging risks of the non-fungible token market.
The European Union launched the MiCA Law project in order to avoid collapses, as for example happened in the Terra project. That is why the idea is to regulate both NFTs, cryptocurrencies and the entire ecosystem surrounding it.
In other words, the new law will require NFT issuers to publish a technical document detailing all the details of the protocol and prohibiting misleading and over-promising claims about its future value.
As the months go by we will see if this has a mostly positive or negative consequence on the cryptocurrency industry and the whole industry, since, as we went over, the Law has a specific section for each sector. The EU wants to be at the forefront of technological innovations and protect citizens from possible scams, money laundering and other illicit cases.A positive issue is that large government institutions are seeing this sector as something real and serious for society with respect to financial assets.
Bruno Le Maire, French Minister of Economy, Finance and Industrial and Digital Sovereignty emphasized wanting to protect Europeans who have invested in these assets and prevent the misuse of cryptoassets, while favoring innovation to maintain the attractiveness of the EU.
This would be the first foray of the European authorities as a standard setter for digital and financial issues.
The idea behind the MiCA is to develop a European approach that encourages technological development and ensures financial stability and consumer protection, in this case, for Europeans.
This digital finance strategy will be accompanied by the Digital Operational Resilience Act (DORA), which will cover CASPs (cryptoasset service providers). In addition, the MiCA had a proposal on a distributed ledger technology (DLT) pilot regime for wholesale uses. The DLT pilot regime aims to regulate smart contract phenomena and to establish specific supervisory authorities.
Finally, the first country to start complying with this authority was Malta. It created a specific application for smart contracts and blockchain technology, the software is called Malta Digital Innovation Authority (MDIA). It was created especially to provide authority in auditing and certification with the aim of advising on innovative technology agreements.
Written by Rodrigo Catalan (TW: @RodrigoCatalanB) for NFT Express.