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Although implementation may delay until 2024, the EU is making progress regarding its blockchain infrastructure policy for the crypto space.
The European Union (EU) is forging ahead with plans for an official blockchain infrastructure policy and has successfully passed a vote on the program. The European Parliament voted 529 to 22 in favor of the Digital Decade policy program to help public services digitize their activities.
The policy will also support a “pan-European blockchain-based infrastructure”. According to the policy file, the EU will embark on a large-scale program involving many countries, to invest in web3 and blockchain solutions. Other parts of the plan include improving high-performance computing, fortifying data infrastructure, and launching more 5G internet corridors.
The Markets in Crypto-Assets (MiCA) regulation outlines several points, including new rules governing the classification and issuance of cryptocurrencies. There will also be regulation of services related to the crypto markets. In general, MiCA will provide regulatory clarity for the crypto industry and may quickly become a blueprint for other countries to follow.
Specifics on the EU Blockchain Policy
The EU blockchain policy puts crypto assets into three categories: E-Money Tokens (EMTs), Asset-Referenced Tokens (ARTs), and Other Cryptoassets. EMTs are stablecoins, assets that have a stable value because they derive value from a fiat currency. The ARTs are stablecoins that do not derive their value from a fiat. An ART may be pegged to any right, value, asset, or combination. This may include more than one currency.
The third category covers all assets that are neither EMTs nor ARTs. However, the Other Cryptoassets category does not include other types of stablecoins like algorithmic assets as they do not meet the set requirements.
MiCA also outlines eight crypto services, including custody and administration, trading platform operations, asset exchange for funds, asset exchange for other assets, and execution of orders – which cover brokerages and intermediary services that help trade on behalf of third parties. Other services include placing of crypto assets (marketing), receiving and transmitting orders on another’s behalf, providing transfer services from one DLT address to another, and crypto advice and portfolio management.
MiCA in the Making
The MiCA was introduced in September 2020 by the European Commission. The initial proposal already contained requirements that crypto issuers publish white papers with detailed information on their projects. It also specified that stablecoin issuers meet specific conditions, including limiting the number of tokens issuable if the stablecoins are not euros or EU currencies.
In a recent tweet, a member of the European Parliament Committee on Economic and Monetary Affairs (ECON), Dr. Stefan Berger, announced approval for the bill. However, the implementation may not happen until 2024. It is expected that the bill will not be adopted until several processes, including legal scrutiny, are completed. According to a MiCA text published on October 5, “It is important to ensure that the Union’s financial services legislation is fit for the digital age and contributes to a future-ready economy that works for the people, including by enabling the use of innovative technologies.”
In addition to regulating crypto usage, the MiCA also contains specifics for crypto mining. The bill will require miners to disclose energy consumption to properly measure the amount of energy that mining activities require.