The European Council approved two proposals for digital assets

The planned EU framework for regulating cryptocurrencies is one step closer to becoming official. On Wednesday, the European Council, which sets the EU’s political agenda, announced its position on the framework of the Crypto Asset Markets (MiCA) and the Digital Operational Resilience Act (DORA).

After the agreement, which then has to be ratified, the European Council and Parliament can now start debating the initiative before it is finally passed into law.

The MiCA framework is designed to protect investors and consumers from fraud, including ensuring that investors’ money is safe in the event of an attack.. 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 the MiCA.

The European Council approved two proposals for digital assets
The European Council approved two proposals for digital assets

The MiCA’s other main goal is to rule stablecoin issuers after Facebook followed up on a desire to establish a stablecoin, originally called “Libra”, backed by a basket of fiat currencies.

The European Central Bank (ECB) has stated that the new rules will create comparable cultural standards for payment service providers to ensure user safety.. According to the latest announcement by the ECB, the framework will also contain provisions on corporate governance and risk management, as well as bans on the provision of services as high-risk payment instruments.

The European Council’s own 400-page MiCA trading mandate suggests that the EU will not loosen its stance on token issuers in relation to assets. It states that they should be subject to stricter obligations than issuers of other crypto assets.

The MiCA’s negotiating mandate included several exclusions. The Council has agreed that tokens with regard to assets that are authorized under the EU Equity Capital Directive “will not be further authorized after [MiCA] to be issued”. According to the MiCA, banks and other financial institutions that provide stable currency settlement services must be exempted from capital requirements.

According to the council, non-fungible tokens, including digital art and collectibles, which will be valued based on the characteristics and advantages of each crypto-asset, are not subject to the MiCA rules. The rules do not apply to tokens that represent unique services or real estate, such as “product or real estate guarantees”.

The European Commission published the MiCA framework in September 2020 as part of its broader digital finance initiative.

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