EU Council Moves Forward With Landmark Crypto Regulatory Framework

Crypto Regulations Coming to the EU

The Council of the EU announced the news on its website on Wednesday (Nov. 24, 2021). According to the publication, the two proposals adopted include the Regulation on Markets in Crypto Assets (MiCA) and the Digital Operational Resilience Act(DORA).

Both proposals were first introduced under the “Digital Finance Package” Back in September 2020. MiCA, proposed by the European Commission, aims to protect investors and preserve financial stability. The MiCA proposal seeks to enable authorized cryptocurrency businesses with licenses to operate in one Member state to also operate across the EU, also known as passporting.

Furthermore, the MiCA framework also touched on stablecoins, proposing stricter regulatory oversight for issuers of asset-backed crypto assets.

The second proposal adopted by the Council called DORA focuses on the prevention and mitigation of cyberattacks. An excerpt from the proposal reads:

“The proposed legislation will require all firms to ensure that they can withstand all types of Information and Communication Technology (ICT) – related disruptions and threats. Today’s proposal also introduces an oversight framework for ICT providers, such as cloud computing service providers.”

Following the recent adoption of MiCA and DORA, the Council will enter into negotiations with the European Parliament regarding the proposal. When an agreement is reached, both parties will adopt the regulations.

Meanwhile, commenting on the latest development was Slovenia’s Minister of Finance, Andrej Šircelj, who said:

“Digital finance is an increasingly important part of Europe’s economic landscape. It is essential to create a stimulating environment for innovative businesses while mitigating the risks for investors and consumers. I think today’s agreement strikes the right balance between the latter. Both files are a priority for the Presidency and we now hope for a quick agreement with the European Parliament on these proposals.”

ECB’s New PISA Framework Includes Stablecoins and Crypto

While the EU is preparing to introduce cryptocurrency regulations, the European Central Bank’s (ECB) Governing Council recently approved a new payments framework, the electronic payment instruments, schemes, and arrangements, (PISA) to include stablecoins and crypto.

According to the press release,

“The PISA framework will also cover crypto-asset-related services, such as the acceptance of crypto-assets by merchants within a card payment scheme and the option to send, receive or pay with crypto-assets via an electronic wallet.”

Fabio Panetta, ECB Executive Board Member, said that the new PISA framework will include traditional payment vehicles and stablecoins, adding that internationally coordinated efforts need to be robust in order to manage the challenges caused by stablecoins and other digital payments.

Meanwhile, the ECB has also shown interest in a central bank digital currency (CBDC). Back in July, the Governing Council of the ECB announced that it would commence the investigative phase of a proposed digital euro project which would last for two years.

ECB official Panetta touted the European CBDC as a better alternative compared to stablecoins. The digital euro is also said to be more environmental-friendly compared to bitcoin’s high energy consumption rate.

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