While the crypto market is slowly recovering from the collapse of Terra LUNA and UST, regulators around the world are becoming increasingly skeptical, as they believe that digital assets pose enormous risks for investors.
On June 30, the EU agreed on the draft law on the regulation of the crypto market, as we reported yesterday.
The legislation, known as Markets in Crypto Assets (MiCA), is aimed at issuers of unsecured crypto assets and so-called stablecoins, as well as trading venues and wallets in which crypto assets are stored.
According to the announcement blog of the EU Council:
“The regulatory framework will protect investors and maintain financial stability, while at the same time enabling innovation and promoting the attractiveness of the crypto-asset sector. This will bring more clarity to the European Union, as some member states already have national laws on crypto assets, but so far there has been no specific regulatory framework at the EU level.”
According to the blog, the proposed MiCA is aimed at protecting consumers. The regulation aims to protect consumers from some of the risks associated with investing in crypto assets and to help them avoid fraudulent schemes.
Crypto service providers, including centralized and decentralized exchanges, DeFi protocols, crypto lending platforms and others, have an obligation under the law to be held liable if investors lose crypto assets.
According to the EU Council, the proposed MiCA will also correct the environmental issues related to crypto mining activities. The legislation will require actors within the crypto ecosystem to declare information about their environmental and climate footprint“.
In addition, the European Securities and Markets Authority will develop draft regulatory technical standards on the content, methods and presentation of information related to the main adverse effects on the environment and climate.
The European Commission will also publish a report on the environmental impact of crypto assets within the next two years. With this report, the Commission will introduce binding minimum sustainability standards for consensus mechanisms, including proof-of-work.