The European Union’s executive branch has laid out plans to create a comprehensive framework for digital assets.
- Confirming CoinDesk's report last week, the European Commission on Thursday proposed legislation that will turn cryptocurrencies into a regulated financial instrument.
- Dubbed the "Regulation on Markets in Crypto Assets" (MiCA), the bill will provide clarity on what constitutes a "crypto asset," as well as definitions for different token subcategories.
- It will provide rules on digital asset custody and capital requirements, while also stipulating what the relationship between the token issuer and the token holder will be, including laying out a procedure for investors to file complaints against projects.
- Officials also floated the idea of a regulatory sandbox initiative for companies developing infrastructure for the trading and settlement of digital assets.
- If passed, the MiCA would turn the EU into the largest and most significant regulated space for cryptocurrencies anywhere in the world.
- The framework will be applicable in all 27 member states, giving regulated crypto companies passport rights across the entire bloc.
- Following on from concerns expressed last week by five European finance ministers, the commission has also warned that stablecoin issuers will likely be subject to more stringent regulatory checks.