the legislator endeavors to take into account the rapidly changing of the digital assets. Thereby, Mica should allow the regulators to frame theissuance of algorithmic stablecoins and some NFT.
In early September, the rapporteur for the European digital asset regulation bill announced that Mica would be ready for October. The schedule outlined by Stefan Berger should be respected.
CoinDesk was able to access a draft of the text of the future regulation dated September 20. And if the document remains open for comments, it would be actually finalized. L’Europe is therefore in the process of taking a new step in the management of the crypto.
More flexible legislation to prevent its obsolescence
The legislator otherwise seems to have wanted to take account in the law of rapid innovation in this market. When MiCA’s work began, NFT and algorithmic stablecoins were, for example, emerging themes.
They have since grown in importance. The risk for the European authorities is therefore to apply a regulations likely to become obsolete very quickly. The challenge therefore consists in relying on a text offering a enough room for interpretation.
This approach to the law “favors substance over form”, which will allow it to apply to new assets, some of which are considered NFTs. Initially, non-fungible tokens were not meant to come under MiCA.
However, our American colleagues report, the rise of split assets reshuffle the cards. These consist of a set of fungible tokens representing a NFT. And if they are of interest to regulators, it is because these tokens could be similar to financial securities.
NFTs requalified as fungible and therefore regulated tokens
They would therefore be regulated through the provisions defined in MiCA. As a result, “the issuance of crypto-assets in the form of non-fungible tokens in a large series or collection should be considered as an indicator of their fungibility,” the draft now specifies.
The allocation of a token unique identifier is not enough to exempt it from the regulations being developed. How then can we distinguish between NFTs subject and not subject to MiCA? It will be up to regulators, national or European, to determine this.
It is up to these authorities, through an analysis of the characteristics of the asset, to determine its real qualification. It is this analysis which will impose itself on its “designation by the users”. The issuer of these tokens cannot hope to escape MiCA simply by designating it as an NFT and assigning it some of its particularities.
Dollar, euro or algorithmic stablecoins: the same rules
In addition to non-fungible tokens, and their variants, Europe is interested in stablecoinsOf type algorithmic. The latter had an eventful year 2022. Their operation is also criticized. Far from ensuring value stability, these tokens can be subject to high volatility.
The legislator also wants to learn the lessons of the past by taking into account a TerraUSD scenario. The algorithmic stablecoins therefore find their place in the MiCA regulations.
[Les stablecoins sont régulés] regardless of how the issuer intends to design the crypto asset, including the mechanism for maintaining stable value,” the text states.
On the other hand, the legislator seems to remove the concerns weighing on the stablecoins denominated in a currency other than the Euro. The initial plan was to limit the issuance of these tokens, which would have excluded benchmark stablecoins like USDC. Now, the text clarifies that MiCA applies to stablecoins, regardless of the associated currency.
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MiCA finalized and open to NFTs and algorithmic stablecoins – Coins.fr
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