The 22nd issue of our legal round-up (July, 2022).

We continue with a series of round-ups prepared by Mercuryo Legal Counsel Adam Berker to keep you updated on crypto regulations.

EU Agrees on New Crypto Regulations

The EU Parliament and the Council have agreed on the provisional agreement for regulating crypto in the EU. It is important to point out this is only a provisional agreement that establishes a common approach of these two institutions to future regulation. This agreement is yet to be approved by the Council and Parliament before going through the formal adoption procedure.

The regulations will cover a number of different aspects:

Passporting System for Crypto Companies

Crypto-asset service providers (CASPs) will need an authorisation in order to operate within the EU. National authorities will be required to issue authorisations within a timeframe of three months. Still, there is no info if crypto companies need additional authorization for operating in the EU if they already have obtained a licence from a local regulator)

Compliance Registration

The European Banking Authority will maintain a register of companies that are non-compliant with the EU AML regulations.

Regulation of Stablecoins

Stablecoin issuers will need to ensure that their stablecoins are 1:1 backed by fiat funds.

Consumer Protection Rights

This will mainly cover companies’ liability in case they lose customer’s money and provisions against market abuse in the form of market manipulation and insider trading.

It should be noted that these measures are mainly focused on preventing situations that were recently observed with protocols like Celsius and Terra.

Climate Change Obligation

Obligation to inform consumers about the climate-impact of cryptocurrencies. These standards will be developed by the European Securities and Markets Authority.

NFTs

NFTs are excluded from the regulation except if they fall under existing crypto-asset categories. The European Commission will prepare a comprehensive assessment in regards to this.

Additionally, the Council and the Parliament have reached agreement on applying travel rules to crypto transactions in order to combat unidentified crypto wallets.

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