The European Union has finalized the full text of its landmark Markets in Crypto Assets (MiCA) legislation. Officially, the text is still open to comments, but sources briefed on the talks have told CoinDesk that it is, in practice, finalized.
A draft of the bill urges EU enforcers to take a “substance over form” approach to the law, meaning its provisions could even apply to some assets categorized as non-fungible tokens (NFT).
MiCA, once passed into law, will require issuers of crypto assets to publish white papers containing technical roadmaps, for platforms to register with the authorities, require stablecoin issuers to hold capital and be prudently managed.
Related: UK Government Eyes Crypto Opportunity With ‘Agile’ Legislation
The new draft also features changes that could indicate how the EU might treat algorithmic stablecoins, which were notably excluded from MiCA’s scope when it was first introduced in 2020. Algorithmic stablecoins – similar to the recently collapsed terraUSD (UST), which used another cryptocurrency and a bit of code to balance its price and supply – should fall within the scope of regulation “irrespective of how the issuer intends to design the crypto asset, including the mechanism to maintain a stable value.”
“Offerers or persons seeking admission to trading of algorithmic crypto assets that do not aim at stabilizing the value of the crypto assets by referencing one or several assets should in any event comply with Title II of this Regulation,” a Recital in the draft said, referring to the section of the law that lays out requirements for crypto asset issuers.
A Recital is a text that introduces an EU law and sets out its motivation. Though not – unlike the substantive articles of the regulation – legally binding, a recital can be used by supervisors and courts when interpreting the scope of the legislation.
An older draft also sought to limit the issuance of stablecoins that reference a non-EU fiat currency like the U.S. dollar which the industry feared would block popular U.S. dollar-pegged stablecoins like USDC out of the EU market. The new draft seemingly removes this cap.
