A new draft of the European Union's MiCA law has been leaked that will affect stablecoin issuers and NFTs.
The European Union has finalised the drafting of the Cryptoasset Markets Act (MiCA)The text is not yet final, as it needs to be revised and is still open to comments from experts and regulators.
However, the draft of the bill from 20 September has been leaked and its contents are already known. Among the changes that have been implemented to the original draft, what has most caught the attention of the community and experts is the fact that regulators are urged to apply “the principle of essence over form”.
What is the importance of that phrase? A lot, since it means that the provisions of MiCA could also apply to non-fungible tokens (NFTs), which until now had been left out of the regulations.
What changes have been introduced in the new draft of the MiCA Act?
The new draft will require token issuing companies to attach in their whitepapers the technical routes of their crypto assets, so that platforms can register them with the authorities and will force stablecoin issuers to maintain capital and be prudent in their management.
In fact, stable coins are another asset that has been affected by the new draft, as they were more or less left out of the previous one. The new draft specifically points to algorithmic stablecoins, such as Terra's UST, which now fall within the regulatory framework, "regardless of the way in which the issuer intends to design the asset, including the mechanism to maintain its stable value".
“Offers or persons seeking admission to trade in algorithmic cryptoassets that do not aim to stabilise the value of cryptoassets by reference to one or more assets must, in any case, comply with Title II of this regulation,” states the Recital of the MiCA project.
On the other hand, while the previous draft sought limit the issuance of stablecoins that were “backed by non-EU currencies” to 200 million euros, the new project proposes that this regulation be modified to be able to apply it to all stablecoin issuers, regardless of the currency in which they are denominated.
Are NFTs included in the new draft?
NFTs have also caught the attention of regulators as they consider that resemble traditional values.
The original draft, from June 2022, noted that MiCA does not apply to NFTs that are truly unique and cannot be traded with each other. However, it considers that NFTs released as collections can be considered fungible, even if their issuer gives them a unique identifier.
In this regard, EU regulators should adopt a “faithful representation” approach, according to which the characteristics of the asset in question should determine the rating and not its designation by users.
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