Crypto regulations Ireland and the EU - update. The law around cryptocurrency may change again, with a set of compromises to the original MiCA legislation announced by the European Union on the 28th of February 2022.
Crypto regulations Ireland and the EU - update
The law around cryptocurrency may change again, with a set of compromises to the original MiCA legislation announced by the European Union on the 28th of February 2022.
Regulating cryptocurrencies has been a complex issue for governments and international organisations. The EU has conducted significant research and announced measures to try and increase legal certainty in the FinTech sector.
The original Digital Finance Package
Their previous attempts to regulate crypto assets were unveiled in September 2020. We discussed this in our previous article .The Digital Finance Package included Digital Finance and Retail Payments strategies, definitions of cryptocurrencies as well as legislative proposals for crypto assets. As crypto-assets are not covered by EU financial regulation, the EU has recognised that a lack of applicable rules means both investors and consumers are exposed to higher risks.
EU-wide regulations for crypto assets
Some countries have tried to create their own national regulations for crypto-assets, which can make it harder for companies and service providers to scale up across EU borders. The EU has announced that they support EU-wide rules for blockchain with the purpose of avoiding legal and regulatory fragmentation. They are also considering a digital Euro, with the European Central Bank and the European Commission Services jointly reviewing the introduction of an official cryptocurrency.
2022 changes to the Directive
The latest version of the EU's Markets in Crypto-Assets (MiCA) directive was announced on 28th February 2022. The proposed changes will be voted on in two to four weeks, according to European MP Stefan Berger. In October 2020, the EU Parliament's Committee for economic and monetary affairs announced that Stefan Berger would be the rapporteur for this file. The compromises he announced in Feb 2022 acknowledge previous concerns raised by companies and officials. It includes a range of measures, such as rules to prevent insider trading and front running. The regulations will apply to firms providing services regarding crypto-assets, firms operating digital wallers, entities issuing crypto-assets and cryptocurrency exchanges.
Removing the Bitcoin ban
One of the main highlights of the new regulations is the removal of the so-called 'Bitcoin ban'. In the previous package, legislative language appeared to bar proof-of-work tokens that lead many to fear a ban on cryptocurrencies that use proof-of-work, like Bitcoin. This controversial passage has now been stripped from the latest version of the MiCA directive.
Creating a fairer market
The MiCA directive is designed to protect consumers and the integrity of cryptocurrency exchanges, whilst supporting innovation. It also recognises and aims to mitigate some potential risks such as cyber-crime, money laundering and measures to increase investor protection. The commission also aims to make the sector more clearly defined, with the recognition of crypto regulation directives also hoping to boost responsible innovation in the sector, stating it is vital for Europe's economic recovery.
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