The European Union’s landmark new legislation, the Markets in Crypto Assets Regulation (MiCA), has been postponed owing to technical issues, putting the final vote until April. According to a representative with knowledge of the situation, the MiCA is scheduled to be voted on by the plenary in April and that the translation problems are one of the technical reasons for the delay.
The European Union postponed the vote from November 2022 to February 2023 out of worry that the long text’s technical problems may cause the licensing regime’s anticipated 2024 implementation date to slip.
In theory, European legislators have approved the law, which also specifies stablecoin reserve standards; however, the almost 400-page document still has to be officially approved by legislators and the member nations of the EU Governing Council. All 27 of the member countries will be directly affected by the law, although national regulators will mostly be responsible for its implementation and interpretation.
In order to serve the approximately 450 million citizens of the EU, MiCA proposes the first-ever uniform licensing system for cryptocurrency wallets and exchanges. MiCA is regarded as a standard-setter that also impacts rule-making around the world.
Legal documents like the MiCA, which were negotiated in English, must be available in all 24 of the EU’s official languages as per EU processes. This would probably result in significant delays to the bloc’s historic licensing program for crypto firms.
European Union authorities said MiCA would have stopped such a collapse after the FTX crash. However, the law includes a significant flaw which would allow organizations like FTX, situated outside of the EU, to continue serving EU clients without additional oversight.
European Union Moves Toward Implementation of CBDC
The much-discussed central bank digital currency, the digital euro, has received an update from the European Union (CBDC).
On January 16, finance ministers in the European Union discussed recent suggestions for the digital euro, following which the participants adopted a CBDC statement. They claimed that some design elements and decisions call for political endorsement.
According to the paper, a CBDC would serve as a monetary anchor that would protect public access to central bank money in the digitalized world by being publicly available to potential users, which is one reason why it would be important. Strategic autonomy would also gain from it since the EU sees it as a way to become more independent from non-European payment options.
Although the paper affirms that the European Central Bank (ECB) would not have access to information on holdings, transaction history, or payment trends, privacy is a topic that is frequently raised in relation to CBDC. The paper also emphasizes that the digital euro is not about programmable money.
A market research article on technological options for the digital euro was also released by the ECB. Participants in the market were here invited to participate in market research to better understand a technical design for the CBDC.
It provided an outline for a potential design for the digital euro for the sole purpose of market research. Consumers, intermediaries including financial institutions, the ECB, and central banks throughout the area are the system’s stakeholders.
The end-to-end flow of the design sees various aspects expected from a CBDC. The consumer makes an onboarding request to the intermediaries, which capture data and perform KYC checks. Once done, they issue wallets to the consumer. At the other end, the digital euro components (overseeing the overall process) check if the user has a wallet already and makes settlement confirmations.