Title: EU seeks deal on ground-breaking rules to regulate crypto

Jun 30, 2022 02:16AM ET

By: AnalysisWatch

The European Union will seek agreement on groundbreaking rules to regulate cryptoassets as the bitcoin rally puts pressure on authorities to rein in the sector.

Globally, cryptoassets are largely unregulated, with national operators in the EU only required to show controls to combat money laundering.

The deal will put the EU ahead of the global regulatory pack by giving crypto asset issuers and related service providers a "passport" to serve customers across the EU from a single base while meeting additional capital and consumer protection rules.

Industry officials say clarity on rules and passporting could attract crypto firms from London. The United States and Britain, two crypto hubs, have not yet approved similar rules.

Representatives of the European Parliament and EU member states are meeting to negotiate an agreement on a cryptoassets law that will come into force around the end of 2023.

A source involved in the negotiations said three issues remain: non-fungible tokens (NFTs), surveillance, and energy consumption.

The deal is likely to focus on including only token-like NFTs in the MiCA's scope, with authorisation and supervision of crypto firms to be done at the member state level.

The European Commission will assess the energy footprint of cryptoassets, the source said.

Firms operating in an EU country will have 18 months after the start date to obtain a MiCA license without interruption of services.

Cryptoassets have come under pressure following the collapse of the TerraUSD and Luna tokens last month, and major US cryptocurrency lender Celsius Network this month froze withdrawals and transfers.

Bitcoin collapsed this month to around $17,600 and is currently trading at around $20,100, well below the late March level of $48,200, leaving investors to suffer losses.