Cryptocurrencies: towards a first European legal framework – 07/04/2022 at 11:32


(AFP / MARTIN BUREAU)

This draft legal framework is a first in Europe, it plans to impose a series of obligations on players in the sector in order to “protect investors and preserve financial stability”.

It is a necessity for a market that attracts many investors but also a lot of controversy. The crypto-asset sector will soon have a first European legal framework. Indeed, after several months of discussions, the negotiators of the European Parliament and of the Council of the European Union found on the evening of Thursday 7 July, the last day of the French presidency of the European Union,

a provisional agreement on a regulation of the crypto-asset market (MiCA).

This draft legal framework,

a first in Europe,

plans to impose a series of obligations on players in the sector in order to “protect investors and preserve financial stability”, according to an EU Council statement.

He

covers cryptocurrencies,

such as bitcoin, ethereum, trading platforms and “issuers of so-called stablecoins”, cryptocurrencies that claim to be pegged to a currency. Conversely, NFTs, “non-fungible tokens” in French,

are excluded.

Currently no rules exist at European level to regulate the purchase, sale or exchange of cryptoassets, and

scams are commonplace.

“Good news” for the AMF

“The agreement reached on the MiCA regulation is good news”, estimated to AFP Robert Ophèle, the president of the AMF, who judges that it “is urgent that the European Union acquires

strong common rules

to regulate stablecoins and crypto-asset service platforms”. An emergency both for consumers and for players who “want to achieve

a maturity of the sector”,

assured the French Ministry of the Economy on Friday.

From now on, crypto-asset service providers (PSCA) will have to

have permission

national regulators to carry out their activities within the European Union. In France, the Autorité des Marchés Financiers has already implemented such a registration principle, which currently includes 39 entities.

They will also be considered responsible in the event of the loss of the assets held on their platform on behalf of their clients. Last year, thousands of French customers assured that they had

lost between 40 and 58 million euros

invested on the Binance platform. When a service provider is domiciled outside the European Union, it leaves the bosom of the European stock market regulators and the

cheated customers find themselves destitute.

“Better protect citizens”

Another draft legislation, on which an agreement was also reached on Wednesday, will complete the MiCA regulation: it concerns

the extension to transfers of crypto-assets

anti-money laundering rules that currently apply to capital transfers.

For the Association for the Development of Digital Assets (Adan), these “two major regulatory texts will change the face of the crypto-European industry” because they constitute “a step towards the harmonization of rules within European markets” in order to

“better protect its citizens

while effectively combating financial crime”. The EU has also decided to tackle stablecoins whose issuers will have to build up a sufficiently liquid and

each holder will be able “to be reimbursed

at any time and free of charge by the issuer”.

Other regulators are looking into cryptoassets around the world

In May, the developers of the stablecoin Terra had

stopped the algorithm

which ensured its stability against the dollar after a plunge in the price. This draft legal framework arrives in

a context of crisis

on the crypto-asset market: bitcoin has lost 70% since its all-time high in November 2021 and the entire market is now worth only $900 billion, two-thirds less than at its peak, according to the Coingecko site.

Elsewhere in the world, other regulators are looking into the crypto-asset sector. In the United States, it is up to now the American policeman of the markets, the SEC, which took the hand on the file, but

from an essentially repressive angle,

and several dozen bills have been tabled in the US Congress in recent months. More extreme, the Central Bank of China in September

declared illegal all transactions

in cryptocurrencies.

The provisional agreement

still needs to be approved

by the Council and the European Parliament before entering into force.

.

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