Key facts:
The MICA Law is based on existing regulations of the traditional financial market.
Lawyers express concerns about how the regulation will affect the privacy of bitcoin.
The Regulation on Markets in Crypto Assets (MiCA), aimed at creating a legal framework for bitcoin (BTC), stablecoins and other digital assets within the European Union, is still under discussion in the tripartite dialogue. It means that, if approved, this regulation could come into force in the next 24 months. But, what is the impact that it can generate in the ecosystem if it is given the go-ahead as it is presented so far?
The answer to the above question is contained in the 168 pages of the MICA bill. Nevertheless, a group of lawyers who are said to be knowledgeable about the cryptocurrency market, published a document on his LexPunk website. In it, he details the keys that generate the greatest concern in the regulations.
First of all, the document highlights that the bill contemplates that the issuers or bidders of crypto assets must publish and present a technical report in which they describe all the data related to the project.
Nevertheless, regulations require that the technical document must be approved by the relevant financial authorities.
On the other hand, from the point of view of LexPunk’s lawyers, the law may also impose certain requirements on project developers, such as the obligation to link their initiatives only with service providers that are regulated. A measure that they consider “resembles traditional ones”, or those that already exist in traditional financial markets.
In that sense, the lawyers find that the law has a technologically neutral approach for several groups of products.
For example, places the governance tokens, the utility tokens, and the NFT (non-fungible tokens) in the same pool “and de facto puts them all in one regulatory category even though they are different from each other.”
Cryptocurrencies under state control?
He also considers as a point against the cryptocurrency market that the MICA law is based on the same policies used by the European Union to regulate the traditional financial marketsuch as regulations such as MiFIDII, MiFIR and SEA.
Issuers, bidders and service providers of crypto assets are identified as the main regulatory subjects. Their obligations are similar to those of their corresponding roles in the traditional financial sector known by regulations such as MiFIDII, MiFIR and MAR. While this seems fair, baking a one-size-fits-all super-regulation for cryptocurrency markets fails to bring regulatory clarity to aspects that bear the least resemblance to the familiar functions and activities of the traditional financial sector.
LexPunk lawyers’ document on the MICA Law.
Jurists do not see the point of creating a regulatory framework for cryptocurrencies, based on existing laws. They believe that the same regulations with which they regulate themselves are being applied traditional financial markets, considering them equal when in fact they are not.
In the specific case of bitcoin, seems like an inappropriate regulation for a decentralized cryptocurrency It does not have any centralized intermediary.
Once the MICA bill is approved, the text adds that “the issuers of this type of cryptocurrency will be subject to important controls by the competent authority. And they will have to respect strong relative requirements of their organizational structure and the management of the funds, “they add.
The MICA Law and its impact on the bitcoin market
On the other hand, the document warns that the rigor of the Regulation “reveals the original intention of the European Union to combat the forms of alternative payment systems to fiat currencies that could affect the monetary policies of the continent.”
The general impression seems to be that this part of the regulation [la de stablecoin] it is particularly (although not expressly) referring to issuers located in other regions of the world that have already issued stablecoins that have gained large market share in recent years. For these operators, it is foreseeable that significant compliance measures will be required to adapt their activities to the new European standards.
LexPunk lawyers’ document on the MICA Law.
Additionally, LexPunks attorneys envision that the MiCA standards block dedicated to crypto asset service providers, will have a huge impact on the activity of centralized exchanges. This in the sense that the strict requirements are likely to create obstacles for smaller companies that will have to bear excessive costs to comply with all the requirements.
Privacy Alert
Similarly in the document warns about regulations regarding cryptocurrency transfers with self-custody wallets. On this he points out: “they will be a problem for all interested parties and could significantly harm the privacy of users.”
As reported by CriptoNoticias, the parliamentarians’ plan with this legislation is to review and reformulate some of the current regulations in order to prevent money laundering and the financing of terrorism (AML/CFT), extending its application to the cryptocurrency ecosystem.
The goal is that transactions with bitcoin and other cryptocurrencies are not only traceable but also identifiable. In such a way that all providers of digital assets apply the so-called “travel rule”, a standard proposed by the FATF (International Financial Action Task Force).
Among the current laws that would be reformulated to achieve this goal, is the one related to the limit amounts of bank transactions that can remain anonymous in the European Union. Currently the minimum amount is set at up to 1,000 euros (USD 1,099).
For Patrick Hansen, a close follower of the regulatory activities of the cryptocurrency ecosystem in Europe, the approval of the measure would result in “that companies [exchanges o proveedores de servicios] they would be forced to cut off transactions with this type of portfolio.”