The framework planned by the European Union to regulate cryptocurrencies is about to become official. On Wednesday, the European Council, which guides the EU’s political agenda, announced its position on the Crypto Asset Markets (MiCA) framework and the Digital Operational Resilience Act (DORA).
Following the agreement, which must then be ratified, the European Council and Parliament can now start discussions on the initiative before it is finally approved as legislation.
The MiCA framework is designed to protect investors and consumers against fraud, including ensuring that investors’ money is secure in the event of a hack. If the authorities believe that certain virtual currency exchange platforms pose a threat to investors or users, they could impose stricter regulations on them under MiCA.
The other major goal of MiCA is to govern stablecoin issuers, following Facebook’s desire to establish a stable coin, initially dubbed “Libra,” backed by a basket of fiat currencies.
The European Central Bank (ECB) said the new regulations would set comparable cultural standards for payment service providers to ensure user safety. According to the ECB’s most recent announcement, the framework will also contain provisions on corporate governance and risk management, as well as bans on providing services such as high-risk payment instruments.
The European Council’s MiCA negotiating mandate, which is over 400 pages long, suggests that the EU will not soften its stance on asset-referenced token issuers. He says they should be subject to more stringent obligations than issuers of other crypto assets.
A number of exclusions have been included in MiCA’s negotiating mandate. The Board agreed that tokens referenced to assets authorized under the EU Capital Requirements Directive “should not require further authorization under [MiCA] to emit. Under MiCA, banks and other financial institutions that provide stablecoin settlement services should be exempt from capital requirements.
Related: Regulators Are Coming For Stablecoins, But Where Should They Start?
According to the Council, non-fungible tokens, including digital art and collectibles that are valued based on the distinctive features and benefits of each crypto asset it offers, are not subject to MiCA rules. The rules do not apply to tokens that represent unique services or real assets, such as “product guarantees or real estate”.
The European Commission released the MiCA framework in September 2020, as part of its broader digital finance initiative.