Posted 11 months ago | by Catoshi Nakamoto
The European Commission has proposed a bill entitled: “Regulation on Markets in Crypto Assets” (MiCA) and its first draft is quickly moving through the European Council and the European Parliament. A lawyer has warned that if the bill passes it could make it more difficult for smaller investors to enter the EU’s crypto market, as well as pin requirements on regulatory authorization for stablecoins and prohibit the earning of interest on fiat-pegged stablecoins. If that’s not enough buried in the drafted legislation is a law that would make marketing cryptocurrency essentially illegal, which is ironically named after the number one manipulator of digital assets, the “Elon Musk clause.” The law would effectively ban any manipulation by “market influencers.”
The drafted legislation also makes it so crypto projects in the EU would be required by law to submit their whitepaper to EU regulatory authorities before launching a token.
“The regulation makes it a legal obligation for crypto projects to issue a white paper and submit it to the regulatory authorities, although the submission will be merely declaratory and the regulatory authorities do not enjoy the power to authorize or reject crypto projects, other than stablecoins,” Firat Cengiz, senior lecturer in law at the University of Liverpool, wrote in a recent analysis of the proposed law on his blog.
According to Cengiz this law if passed would create “a regulatory and legal hurdle for the launch of crypto projects by, for instance, requiring them to be established as a legal entity in one of the member states.” Cengiz stressed in his article that these new provisions would make it extremely challenging for smaller investors to enter the digital asset market.
She also noted the crazy insane “Elon Musk clause,” which would bar any influencers from talking about digital assets on social media. There is no word on how the EU would enforce this law except on its own citizens. It’s important to note that Elon Musk has lost his influence on the crypto market as this drafted law is being pushed in the European Parliament.
“The so-called ‘market influencers’ might refrain from utilizing social or conventional media to cause a decrease or increase in the price of cryptocurrencies once the regulation comes into force. The regulation prohibits such market manipulations which could be punishable with criminal remedies depending on the applicable national law,” Cengiz wrote.
Cengiz expressed that, if the regulation passes, all existing stablecoins will have to seek authorization from the regulatory authorities in the EU to enable trading for EU citizens. There is no word, on how the EU plans to prevent the decentralized trading of stablecoins through a computer protocol. In other words, most of these politicians writing these laws likely have no idea what the hell they are doing or what technology they are dealing with, and their own limitations as regulators.
Additional provisions within the proposed regulation for fiat-pegged stablecoins, i.e. USDT, USDC, or DIA, states the prohibition of earning interest. Which, Cengiz said, “constitutes an undue intrusion into financial autonomy.”
According to Cengiz, with the EU proposing banning interest, regulators are “arguably aiming to disincentivize the investment of crypto profits in stablecoins, and consequently to protect the interests of the European banking sector.” In addition, she said, this protects the interests of national tax authorities. Cengiz added these same authorities “will find it substantially easier to monitor crypto profits if they are turned into fiat money rather than kept in stablecoins.”
“There is no explanation in the regulation as to why this intrusion to financial autonomy is necessary. This prohibition will deprive European citizens of an attractive investment option, particularly considering that financial stimuli instruments adopted to limit the economic impact of lockdowns are expected to result in historically high inflation rates,” Cengiz concluded, adding that “the regulation overregulates stablecoins”.
This bill comes on the heels of an announcement by the EU of establishing a new regulatory body focused on crypto digital assets. The European Union has proposed a new agency to crack down on the cryptocurrency space proposing new anti-money laundering rules and new strict transparency rules for any transfers of digital assets, Reuters reported. The EU’s executive European Commission is introducing a new Anti-Money Laundering Authority (AMLA) that will become the “centerpiece” of an integrated supervisory system that will also consist of other authorities.
Further, as per documents seen by Reuters, all virtual asset service providers (VASPs) like exchanges, for instance, will have to collect and make all data accessible of those making transactions. This comes as finance ministers representing the G20 or the world’s largest economies are meeting today in Italy from July 9th to July 10th. Numerous sources indicate that crypto digital assets, CBDCs, and regulations are high on the agenda of the G20’s discussions.
Bitcoin is currently trading at [FIAT: $33,234.05] UP +1.9% in the last 24 hours according to Coingecko at the time of this report.