EU Crypto Law, EU Crypto Law, Next 24 Hours Could be Crucial as Officials Debate Emissions, DeFi, NFTs. Lawmakers will make a final call on banning Bitcoin-style validation and consider how to treat decentralized finance.
As the European Parliament moves towards finalizing its position on Europe’s Markets in Crypto Assets (MiCA) framework, the EU council, made up of government ministers and other officials from member countries will tomorrow meet to discuss EU crypto law on how to treat non-fungible tokens (NFTs), decentralized finance (DeFi) and the environmental impact of bitcoin-style assets.
The EU’s landmark MiCA regulation seeks to offer a single license for crypto providers to operate across the bloc’s 27 member countries, in exchange for measures intended to protect investors and safeguard stability.
But it will only pass into EU crypto law if governments and lawmakers agree on an identical document, and there’s several issues to be ironed out first.
First, the European Parliament needs to figure out how – and in particular whether it wants – to limit the use of proof-of-work methods used to validate Bitcoin, a process which some worry consumes too much energy.
A report penned by EU parliamentarian Stefan Berger has already said that initial coin offerings should inform investors of the environmental damage in the “white paper” they must publish under MiCA – and Berger now seems confident that there won’t be a mutiny from other lawmakers seeking more heavy handed measures that could amount to a Bitcoin ban.
“The deadline to challenge my trilogue mandate runs out at midnight,” he tweeted in German Thursday morning. “So far everything seems calm.”
Friday morning, government officials, collectively known as the EU Council, will meet behind closed doors to hammer out how Berger’s views differ from their own – and France’s officials seem relatively optimistic that they can find common ground.
“The texts of the European Parliament and the Council converge to a great extent on the framework applicable” to the large-scale currency tokens that are most heavily regulated by the new law, said a document prepared by French officials ahead of that meeting which was seen by CoinDesk.
In a position set out last November, ministers sought tight curbs on any attempt to issue assets that could be widely used as an alternative to regular fiat currency – a move likely targeted at the now canceled Diem cryptocurrency supported by Facebook and other industry players.
There may well still be squabbles over the exact roles of regulators like the European Banking Authority, the European Securities and Markets Authority and their national equivalents, said the French document, which currently chairs talks within the Council.
But there may also be disagreements over how to deal with innovations in a field which moves faster than lawmakers can.
DeFi has seen a surge recently, and some EU lawmakers have pushed to allow decentralized autonomous organizations (DAOs) to issue new cryptocurrencies – something that wasn’t even on the agenda earlier when the MiCA law was first discussed.
“Member States might wish to discuss this issue again,” the French document said, as DeFi “was still in full development at the time of negotiations.”
The framework also isn’t intended to cover non-fungible tokens (NFTs) that can be used to prove ownership of assets like artworks. But, France concedes, if they grant a right to a share of profits similar to conventional securities, they could be made subject to existing financial service laws on investor information and against market abuse.