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Understanding MiCA 📜 🇪🇺
The EU crypto laws you should know about to understand MiCA. Distributed ledger tech could save TradFi $100B a year. Beeple vs Bitboy Crypto controversy erupts. CZ takes a dig at Dogecoin's longevity.
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After a vote on May 16, the Economic and Financial Affairs Council of the European Union has given a resounding thumbs up to the highly-anticipated Markets in Crypto-Assets (MiCA) regulation.
Goals? The magic of MiCA
Finance ministers from 27 member states voted in favour of the MiCA bill.
🚂Here's another 9 rules to keep an eye on
Crypto's Travel Rule: This rule requires both the sender and receiver of crypto transactions to provide their identity information. It comes into play alongside MiCA (the Markets in Crypto-Assets Regulation).
Anti-Money Laundering Rules: The EU's anti-money laundering regulation now covers decentralised finance, NFT platforms, and DAOs. These "obliged entities" were left out of MiCA, so the AML package picked up the pieces and brought them into the fold.
Smart Contract Regulation: The Data Act, currently under negotiation, includes rules for regulating smart contracts used in data sharing. One interesting provision is the inclusion of a kill switch in smart contracts. Just in case things go wrong, you can pull the plug!
Cybersecurity Laws: The Digital Operational Resilience Act ensures that financial companies, including crypto service providers, have standardised network and data security measures.
Tax Reporting: DAC8, the Directive on Administrative Cooperation, demands that crypto asset service providers report for taxation purposes. This could boost the EU's tax revenue by a cool €2.4 billion per year.
Tokenised Markets Sandbox: The DLT Pilot Regime is a regulatory sandbox where traditional financial players and newcomers can experiment with tokenised financial instruments and decentralised technologies.
Bid for a Digital Euro: The European Central Bank is in the final stages of designing a central bank digital currency. While the decision will be made in October, the European Commission will propose legislation in June.
Metaverse and Virtual Worlds Proposal: The European Commission has released its proposal on virtual worlds. Industry experts had their say, and their feedback will shape the future text.
Digital Identity Framework: The EU wants to give its citizens a personal digital ID wallet to access public services. The legislation includes fancy zero-knowledge-proof technology to protect your privacy.
🎁 What MiCA?
MiCA isn't just any old regulation; it's the superstar of the European crypto scene. This legislation brings clarity and order to the wild world of cryptocurrencies and their accompanying services and activities. The European Union is putting its foot down and saying, "Hey, let's have some fun, but let's also play by the rules!"
One of the main reasons behind MiCA's epic entrance is to protect Europeans who have taken a leap of faith into the world of crypto investments.
Stablecoin issuers will need to meet certain capital and reserve requirements ensuring a solid foundation for these steadfast digital assets. Also, If you're a company offering crypto services in the EU, MiCA allows you to "passport" your license from one member state to another within the 27-nation bloc.
🌟MiCA's Journey to Stardom
The European Commission first proposed MiCA in September 2020.
MiCA didn't become a superstar overnight.
It faced hurdles, twists, and turns on its journey through the legislative process. But it's a story of triumph.
The European Parliament gave a standing ovation by formally adopting the MiCA legislation on April 20, paving the way for its final approval by the European Council.
Now MiCA requires the bill to be published in the Official Journal of the European Union. And that's it.
MiCA's grand debut as EU law is scheduled to take place midway through 2024. The laws on stablecoins will take the stage in mid-2024, while the rest of the regulations will kick off the show at the beginning of 2025.
TTD Numbers 🔢
The amount that can be saved if distributed ledger technology (DLT) was used in traditional markets - a new report from the Global Financial Markets Association (GFMA).
GFMA CEO Adam Farkas
“Distributed ledger technology holds promise for driving growth and innovation. This potential should not be ignored or prohibited where regulatory oversight and resiliency measures already exist.”
What you should know
A distributed ledger is an umbrella term for a system that records transactions and digital information.
A blockchain is a specific type of distributed ledger.
Implementing distributed ledgers in collateral processes for derivatives and lending markets could lead to an additional $100 billion in savings.
Utilising smart contracts for automating clearing and settlement processes could reduce overhead costs by $20 billion annually.
The GFMA report aligns with Citi investment bank's prediction that the global market for blockchain-based tokenised assets could reach $5 trillion by 2030.
TTD Blockquote 🔊
Changpeng Zhao. Call him CZ. Binance CEO.
Elon Musk latched onto it and extended its life maybe
CZ ain’t chuffed about the longevity of Dogecoin.
#FYI - He has unfollowed Musk on Twitter.
CZ is not against memecoins, but has been vocal about the risks associated with them and that he personally prefers token with utility. Binance recently listed PEPE on their platform.
"It is what it is. Right now it seems to be popular. But having said that I do think there's very high risk. We tend to follow what our users are active at.
One memecoin that really surprised me was actually Dogecoin. It has had a super long-lasting power. I thought it would have disappeared a long time ago. But Elon Musk latched onto it and extended its life maybe."
CZ made these comments during a Twitter Spaces "ask me anything" session.
Kicks off a storm #Read
TTD Surfer 🏄
Twitter co-founder Jack Dorsey leads $6 Million investment in Bitcoin voucher service Azteco.
Bitcoin miner Bit Digital will relocate a portion of its mining machines to Iceland and Canada, to mitigate potential regulatory risks. US.
Visa trials Ethereum's Goerli testnet with smart contracts aimed at transaction-free payments with the help of account abstraction.
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