European Commission has ‘Strong Reservations’ about markets in crypto-asset draft

European Commission
TL;DR Breakdown
  • The European Commission disagrees with the Markets In Crypto Asset draft.
  • The European Parliament has already voted for the draft.
  • Anti-laundering and anti-terrorism financing are the vital points of departure for the two entities.

The European Commission has strong reservations about the proposed crypto asset regulation. They cited that the draft has a few grey areas that need clarity. According to unofficial media sources, the executive arm in Brussels is not okay with some anti-money laundering moves.

Currently, there is work underway at the European Commission on a compromise proposal for EU crypto rules. Earlier, the European Parliament voted on the draft of Europe’s Markets in Crypto Assets (MiCA) law. The proposed law is currently at the debate stage, where it faces obstacles in the European Union’s legislative branch.

For the two months, talks have been ongoing with the other two parties involved in the legislative process of the European Union. The parties include the Council of the European Union and the European Commission (EC).

European Commission intends to amend the draft

Details of an unofficial letter have emerged. The letter seen by BTC Echo reveals that the Commission is planning revision. It went ahead to say that there are parts where the Commission feels they have a contrary stand to that of Parliament.

The European Commission has specific concerns about certain anti-money laundering and anti-terrorist financing measures. These measures hold the intentions to prevent money laundering and terrorist funding.

The contentious issue is a provision that appears in Article 4 of MiCA. It highlights the Parliament of the European Union’s intention to prevent the EU from licensing crypto asset service providers (CASPs) based in non-compliant areas. Besides, it prohibits the EU from licensing Entities registered in countries that do not levy a corporate tax.

The Commission notes that there is no prohibition of a comparable nature in any other acts of law. Besides, such a limitation would violate the World Trade Organization’s laws and regulations.

However, the European commissioner feels it is unclear why they should apply that policy to crypto service providers. These ideals are subject to other EU directives on countering fraud and terrorist financing. The EU feels that these directives offer enough security. They cater to cases of users from third-world countries in high-risk regions, and they do so adequately. The new regulation would only make things more difficult for the authorities in the EU.

The regulation proposes a register of CASPs that break the law

Additionally, the European Parliament suggests the creation of a register for CASPs that do not follow the rules. According to the Parliament, the European Securities and Markets Authority (ESMA) should manage it.

The letter from the Commission discloses that it has what it refers to as “severe reservations” about the viability of this idea.

Besides, it suggests that it should appear in the basic anti-money laundering legislation if there is any need. This legislation applies to all participants in the financial system.

In addition, the European Commission has issues with the adopted criteria for non-compliance. The EC is claiming that these standards are ambiguous.

In this regard, it is asking that the European Parliament make modifications. The EC maintains that the amendment would bring forward a compromise deal before the next session of trialogue negotiations. The debate session is set to take place on Wednesday, May 18.

In a related event, the EC is planning to place severe restrictions on the capacity of stablecoins as a substitute for fiat currency. According to reports, officials are allying with the opinions of European Union leaders. So far, he has suggested difficult steps to prevent virtual currencies such as Libra stablecoin from replacing the euro. The steps include banning the issuance of new digital currencies once transaction volume reaches 1 million per day.

The Commission supports the Council language that restricts the production asset referenced tokens. It maintains that the approach of forcing issuers to refund clients their tokens will lead to financial ingenuity. That might jeopardize stability!

Nellius Irene

Nellius Irene

Nellius Irene is a cryptocurrency investor and journalist who has been in the nascent space since 2018. She has researched and written on several crypto-related topics including non-fungible tokens (NFTs), decentralized finance (DeFi), fundraising, mining, etc. Her major focus is covering regulatory events that are capable of shaping the entire crypto ecosystem.

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