In countries with the fall code, fall is usually an open time for regulators. As unprecedented as it is, 2020 is no exception to this trend. Tensions are high on both sides of the Atlantic: As markets continue to grapple with news that the US Commodity Futures Trading Commission is taking harsh action against the BitMEX trading platform, the UK Financial Conduct Authority, the UK Financial Conduct Authority, has moved to ban private investors from using fully derivatives cryptocurrencies.

The tense information cycle has somewhat softened the impact of yet another regulatory bomb that fell a week ago and is likely to have a major long-term impact on the global financial system: a law proposed by the European Union for crypto real estate markets.

A long-term framework designed to provide regulatory clarity for digital finance companies serving EEA citizens is likely to be particularly sensitive to two interconnected areas of the cryptocurrency industry that have dominated history for much of 2020: stable currencies and decentralized financial applications. … What gives?

Stable currencies as a threat to stability

Known as the “Crypto Assets Market Regulation” or MiCA, the project is currently a proposal submitted by the European Commission, the executive branch of the European Union. It still has a rather lengthy legislative process before it becomes law, which means that it may take months or even years before the new rules take effect.

The text says that stablecoins, also called “asset tokens” and “e-money tokens” in the document, were in the minds of European legislators: MiCA singles out this asset class and provides for customization – regulation.

According to the law, exporters of stablecoins must be registered as a legal entity in an EU country. Other requirements include provisions regarding equity capital, investor rights, asset and information storage, and governance arrangements.

Albert Isola, Gibraltar’s Minister of Digital and Financial Services, explained to Cointelegraph that the European Commission’s increased interest in stablecoins is due to the government’s concerns about economic stability in the eurozone:

Stable currencies are widely viewed as potentially providing significant benefits as a digital payment method, providing greater financial inclusion and a more efficient way to transfer funds. It is also viewed as a potential risk to financial stability and integrity, and may reduce the effectiveness of monetary policy. It seems logical that the European Union might not want to have another entity other than the European Central Bank that issues the euro electronically.
Isola said that “destructive factors” such as a potentially stable currency for land transportation could significantly decentralize control of the currency.

Seamus Donoghue, vice president of sales and business development at Metaco Digital Financial Infrastructure Provider, called the impressive growth in the stable foreign exchange market in recent months as a prerequisite for government interest, which he called a “positive reaction”:

The market capitalization of stablecoins alone grew 250% in 2020 from $ 520 million to $ 1.86 billion, with growth accelerating significantly over the past two months. Undoubtedly, the supervisors also noted that while the asset class relative to the traditional payments industry is still relatively small, it is likely to have a huge impact on regulated banks and payment managers.
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An example of the serious concern of senior EU officials about the bloc’s monetary sovereignty is the fact that the former finance ministers of Germany, France, Italy, Spain and the Netherlands issued a joint statement in early September, which referred to the suspension of stable foreign exchange transactions in Russia. Europe. union. “Legal, regulatory and regulatory issues have been resolved,” said Konstantin Richter, CEO and founder of BlockDimon, a blockchain infrastructure company.

Richter added that some of the most visible figures in European financial policy, such as German Finance Minister Olaf Schultz, have called for the rules.

Most of the experts who spoke to Cointelegraph mentioned the Facebook-backed stablecoin as a starting point for the European Commission’s reflections on the risks and opportunities that the tokens mentioned in the assets represent.

Source: CoinTelegraph