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This would result in the issuers of Non-Fungible Token collections publishing the ‘white paper’ that initially conveys all the information about the protocol utilized by the NFTs.
According to an announcement at the Korea Blockchain Week, Non-Fungible Tokens (NFTs) will be treated as cryptocurrencies and regulated similarly under the Market in Crypto Assets (MiCA) law. NFTs that have originated out of a collection will have to comply with the new European Union Crypto rules issued to caution the investors of the underlying risks.
While there were several initial assertions around keeping the specially-designed ownership tokens aside from the bloc’s recently approved Mica Law, the recent announcement presents the decision-making of the board in a different direction. The EU policymakers, on July 1st, shook hands on milestone legislation that aims to make regulatory decisions on crypto tokens and service providers spanning over twenty-seven nations that are members of the EU.
As the regulatory decision-makers, they made laws for the world’s third-largest economy, after almost two years of debate and discussion over MiCA. The decision included crypto companies to put out a ‘technical manifesto of sorts, calling it the “white paper”. The law also required officials to maintain valid bank-style reserves for stablecoins.
While the deal was struck at the end of June, the treatment of NFTs went on for a longer period of time as they are not only a business in the crypto world but also a form of art and legitimate ownership.
While there is no official document to validate the texts, according to European Commission’s Peter Kerstens, who is also an advisor for technological innovation for the commission’s financial-services arm, the legislators at the EU have a rather small view of what an NFT is. This means that collections of NFTs, with every one of the NFTs unique, might not be considered and the provisions will be involved.
This would result in the issuers of Non-Fungible Token collections publishing the ‘white paper’ that initially conveys all the information about the protocol utilized by the NFTs, and also will not be allowed to claim any absurd guarantees about the future estimate that can end up conning investors into purchasing the product.
While EU national administrations believed that the inclusion of NFTs in MiCA might end up creating an unfair expansion of the bill that was initially made to safeguard the interests of investors in stablecoins and ICOs, the policymakers from European Parliament had a different plan. According to them, the NFT market is as vulnerable against the securities-style rate change as any other.
Kerstens was himself skeptical about the entire white paper plan for every NFT, and the fact that companies like OpenSea might have to actually take regulatory approval for every NFT it launches could lead to the suppression of innovation in the digital sector.
While this is true, Korean policy-makers are still trying to debate the right way to regulate the crypto space. The way forward, as described by the EU and the United States, might be able to streamline a path for the other countries to follow.