The European Union has enshrined the first major powers under its forthcoming Markets in Crypto Assets Law (MiCA), a set of strict guidelines poised to reshape the cryptocurrency landscape within the bloc of 27 countries. The European Securities and Markets Authority (ESMA) has released a detailed proposal outlining how to legally authorize EU crypto companies, from handling user complaints to managing conflicts of interest.
Stablecoin issuers in particular are under intense scrutiny as the MiCA guidelines implicitly draw lessons from the notorious collapse of USDT and FTX. The regulations stipulate that companies issuing stablecoins to operate within the EU under a single MiCA license must meet certain requirements. These include demonstrating clear segregation of client funds and crypto assets from the company’s own account and detailing the security of their systems, particularly with regard to distributed ledger technology.
The new measures come amid the European Commission’s (EC) ambitious move to “Web4”, a concept that combines blockchain technology with artificial intelligence, the Internet of Things, virtual worlds and augmented reality capabilities. Two major projects support this effort: CitiVerse, an immersive urban environment aimed at revolutionizing city planning and management, and the European Virtual Human Twin, which aims to create a digital replica of the human body to advance medical treatments and disease management.
The MiCA regulations — agreed in 2022 but not going into effect until 2024 — and the EU’s Web4 ambitions emerge as part of a wider EC strategy to encourage EU-based creators, media companies, developers and more support. The aim is to establish a regulatory framework similar to that of MiCA for these innovative companies, based on recommendations made by the Virtual Worlds citizen panel in April this year.
These developments highlight the EU’s joint efforts to strike a balance between fostering innovation and maintaining market integrity and consumer protection. As crypto assets gain momentum and the frontier of digital technology expands to Web4’s EC definition, it remains to be seen how these regulations will shape the future of the European digital economy.
Editor’s Note: This article was written by an nft now contributor in collaboration with OpenAI’s GPT-4.
