The Markets in Crypto Assets (MiCA) law has been finalized by the European Union. Although the text is still officially up for comments, insiders briefed on the negotiations have told CoinDesk that it has been completed.
The bill’s provisions may even apply to some assets classified as non-fungible tokens, according to a leaked draft that was dated Sept. 20 and confirmed by CoinDesk. The draft calls for EU enforcers to prioritize “substance over form” when enforcing the law (NFT).
When the MiCA becomes legislation, it will mandate that platforms register with the government, stablecoin issuers keep capital, and crypto asset issuers publish white papers providing technological roadmaps.
The updated draft also includes revisions that could provide insight into how the EU might handle algorithmic stablecoins, which were conspicuously left out of the original 2020 version of MiCA’s application. Algorithmic stablecoins should be subject to regulation “irrespective of how the issuer intends to design the crypto asset, including the mechanism to maintain a stable value,” as did the recently defunct terraUSD (UST), which used another cryptocurrency and a small amount of code to balance its price and supply.
The draft said in a Recital that “Offers or people requesting admission to trading of algorithmic crypto assets that do not aim at stabilizing the value of the crypto assets by reference one or multiple assets should in any event conform with Title II of this Regulation.”
A paragraph called a Recital introduces an EU law and explains why it was created. A recital can be utilized by supervisors and judges to determine the scope of the law even though it is not legally binding, unlike the substantive articles of the regulation.
An earlier draft also attempted to restrict the issuance of stablecoins that make use of a non-EU fiat currency, such as the U.S. dollar, which the market worried would exclude well-known USDC-pegged stablecoins from the EU market. This cap appears to be eliminated with the new draft.
NFTs: Are they in or out?
NFTs are typically created with a singular digital identifier that cannot be duplicated, swapped, or divided; however, the rise of fractionalized assets, in which a number of fungible tokens are created to represent a single NFT, has regulators concerned that they may resemble traditional securities.
While the leaked draft, which was worked out in a series of technical meetings after a June 30 agreement, shows MiCA doesn’t apply to NFTs that are truly unique and unable to be traded with each other, the final compromise text states in a Recital that “the issuance of crypto-assets as non-fungible tokens in a large series or collection should be considered as an indicator of their fungibility.”Share & like