The EU adopts strict new rules requiring the physical presence of stablecoin issuers

Source: Adobe Stock / Sergey Kelin

Following the EU’s agreement on the regulation of cryptocurrencies, which sets strict rules for all players in the crypto market, the crypto industry is reminded that there is “more work to be done”.

Rebecca Rettig, General Counsel for the decentralized financial platform Aave (AAVE) and board member of the crypto-friendly Silvergate Bank, praised the efforts to “bring clarity to the cryptocurrency,” as she has “argued for years.” But more needs to be done. “

She went on to say that with DeFi set to be the next on the EU radar, the DeFi sector must now ensure that politicians understand the technology and the fact that DeFi “must be regulated differently” than centralized crypto players.

“When the EU deals with DeFi, we will work with policy makers to ensure that a secure and resilient system is in place for users, while providing space for further innovation in the Web3 world,” Rettig added.

Meanwhile, the new rules represent a preliminary agreement on the long-awaited regulatory framework for crypto-asset markets (MiCAs) and oblige so-called crypto-asset providers (CASPs) to a much greater extent than before.

Bruno Le Maire, French Minister for Economic Affairs, Finance and Industrial and Digital Sovereignty, commented on the agreement, saying the new regulation would “put an end to the wild west of cryptocurrencies”, while strengthening the EU’s role as “standard setter in digital issues”. “approved.

Among the requirements for CASPs under the new rules is the legal responsibility of companies if they lose their customers’ crypto assets. The rule applies to all centralized companies in the crypto area, including wallet providers of “hosted” or custody wallets, but not so-called “unhosted wallets”.

In addition to wallet rules, the new rules also introduce new requirements designed to prevent “market manipulation and insider trading,” according to the announcement.

In addition, the rules go into detail about the “environmental and climate footprint” of various players in the cryptocurrency market. In future, these actors will be required to declare information on their environmental impact in accordance with technical standards set by European Securities and Markets Authority (ESMA) to be developed.

The message added that European Commission publish a report on the environmental impact of cryptocurrencies within two years and introduce “binding minimum sustainability standards” for consensus mechanisms such as proof-of-work (PoW).

In addition, the recently concluded agreement states that it European Banking Authority (EBA) to maintain an up-to-date list of all service providers who do not comply with EU rules.

Additional measures will be taken for service providers whose parent company is located in countries classified by the EU as having a high risk of money laundering or in countries on the EU’s list of “non-cooperative tax jurisdictions”. These include “enhanced controls” in line with the EU anti-money laundering framework.

Compatible stablecoins

For stack coins, the new rules state that only fully secured stack coins will be compatible and that holders must be able to “return the coin from the issuer” at any time and at no cost “in a 1: 1 ratio.

She added that all stack coins are under supervision European Banking Authority will fall.

A physical presence of the stablecoin issuer in the EU will be a “prerequisite for any issue.”

Philipp Pieper, co-founder of the DeFi infrastructure provider swarmtold that the new rules will hit stablecoins particularly hard.

Stablecoins are “in the firing line,” Pieper said in an email comment, while correctly predicting that “there will be some pretty hefty new rules regarding registration and issuance.”

Exclusive NFTs

The Communication states that non-fungible tokens (NFTs) “are excluded from the scope unless they fall into existing categories of cryptocurrencies.”

She added that the European Commission will propose further rules for the NFT market “if deemed necessary.”

Subject to approval

The new rules have yet to be dated European Council and from European Parliament approved before they can enter into force.

They come on top of the Transfer of Funds Regulation (TFR) regulation adopted earlier this week, which includes traceability of crypto transfers and rules for so-called “unhosted wallets”.

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