The Good Tech Companies - Europe's New Crypto Law Gives NFTs a Free Pass (For Now)

Episode Date: January 23, 2025

This story was originally published on HackerNoon at: https://hackernoon.com/europes-new-crypto-law-gives-nfts-a-free-pass-for-now. MiCA was designed to regulate crypto-activities across the European Union (EU). It mostly applies to businesses, but there are some bits for users. Let's see! Check more stories related to web3 at: https://hackernoon.com/c/web3. You can also check exclusive content about #crypto-regulation, #what-is-mica, #mica-regulations, #eu-mica, #crypto-in-the-eu, #obyte, #good-company, #hackernoon-top-story, and more. This story was written by: @obyte. Learn more about this writer by checking @obyte's about page, and for more stories, please visit hackernoon.com. The Markets in Crypto-Assets (MiCA) proposal was born in 2020. MiCA is a full-fledged law, whose implementation was completed by the end of 2024. It mostly applies to businesses with operations inside any of the EU's 27 countries.

This audio is presented by Hacker Noon, where anyone can learn anything about any technology. Europe's new crypto law gives NFTs a free pass, for now, by Obite. Crypto is here to stay, and regulators worldwide know it. The European Union set out to bowne of the pioneers in providing regulatory clarity for this industry, and that is how the Markets in Crypto Assets, MICA, proposal was born in 2020. This act was designed to regulate crypto activities across the European Union, EU, offering transparency, consumer protection, and legal certainty for businesses and users. Today, MICA is a full-fledged law, whose implementation was completed by the end of 2024. To sum it up a bit, we can say that it

mostly applies to businesses with operations inside any of the 27 countries of the EU. They don't even need to be headquartered there if they're offering services to EU citizens anyway. There are some strict rules for certain operations with crypto, while others are almost ignored in the meantime. Let's explore that quickly. MICA Reach. Tokens and CASPs. Mika applies to three main types of tokens. Electronic money tokens, EMTs, asset-referenced tokens, ARTs, and other crypto assets, like utility tokens. EMTs are stablecoins backed by a single fiat currency,

while ARTs stabilize value through multiple currencies or assets. Both token types, considered stable coins, face stringent rules, including having a one-to-one reserve and obtaining authorization before being listed or offered. Algorithmic stable coins, which lack explicit reserves and instead depend on mathematical formulas to stabilize their price, are banned under MICA. At least, for crypto exchanges to deal with them. On the other hand, all token issuers, of stable coins or any other token type, must publish white papers detailing their features and risks, ensuring transparency. Crypto asset service providers, CASPs, such as exchanges,

custodial wallet providers, and crypto advising firms, are heavily impacted. They must register in an EU country, maintain at least one EU-based director, and adhere to strict anti-money laundering, AML, and consumer protection standards. CASPs serving over 15 million EU users face stricter oversight as significant CASPs, SCASPs. These measures aim to improve security, prevent market abuse, and build user trust, and require more capital from companies. Stablecoins have drawn significant attention due to their potential impact on monetary sovereignty. MICA restricts non-European stablecoin issuers from surpassing 200 million euros in daily transactions. To comply, issuers like CircleHave secured EU licenses, while others,

such as Tether, face challenges, prompting exchanges to delist their tokens for EU customers. As MICA's implementation phase continues, starting full application in December 2024, its effects are becoming clearer. With stablecoin rules already in force since June, the EU is setting a precedent for global crypto regulation. Outside mica reach, we can say this is a comprehensive law, but it doesn't cover every aspect of the crypto world. Some crypto assets and activities fall outside its scope. For instance, non-fungible tokens, NFTs, are not automatically regulated under MEC unless they resemble other crypto assets,

such as utility tokens or financial instruments. NFTs issued in large series might be considered fungible and could require authorization, but unique, one-of-a-kind NFTs remain mostly unregulated. This flexibility allows creative and artistic projects to thrive without heavy restrictions. Decentralized applications, DApps, Decentralized Autonomous Organizations, DAOs, and Decentralized Finance, DeFi, projects are also excluded if they don't hold custody over their users' funds. Speaking of which, peer-to-peer, P2P, transactions and non-custodial wallets are largely excluded from direct oversight. MICA doesn't impose these rules

on software providers or wallets they tell users to maintain full control of their private keys, like Metamask Oribite, or hardware wallets such as Ledger or Trezor. As we can see, this law mostly applies to intermediaries, who are required to comply with the anti-money laundering AML and counter-financing of terrorism, CFT, rules. In other words, companies that must identify their customers and offer reports to authorities, like any other bank. This is the main change, if there's any, that crypto users in the EU would face with MICA. Identify themselves and their transactions when dealing with centralized crypto services, exchanges, funds, custodial wallets, etc.

But that's not exactly unfamiliar at this point, in most parts of the world. In any case, EU citizens still can legally use decentralized crypto ecosystems, services and assets. For instance, Obite is a fully decentralized crypto ecosystem with DAG-based structure, enabling P2P transactions without central authorities, and ensuring censorship resistance. Its native privacy coin, BlackBytes, is designed to never touch an exchange or identification process, offering a truly private alternative for those seeking it. Featured vector image by Vector Juice, FreePic, and thank you for listening to this HackerNoon story, read by Artificial Intelligence.

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