The European Union (EU) has agreed to some new regulations for the crypto space.
The EU Seeks to Regulate Crypto
Under the new laws being implemented, a cryptocurrency company working in an EU-labeled country must obtain a license before operating. It will also need to implement certain safeguards to ensure customers and their money are safe from fraud and illicit actors. Up to this point, crypto companies were only required to show proof that they had barricades against money laundering in place.
Stefan Berger – a rightwing lawmaker from Germany that has led parliamentary negotiations – explained in a recent interview:
Today, we put order in the Wild West of crypto assets and set clear rules for a harmonized market. The recent fall in the value of digital currencies shows us how highly risky and speculative they are and that it is fundamental to act.
Spokespeople for the EU also chimed in, explaining:
With the new rules, crypto asset service providers will have to respect strong requirements to protect consumers’ wallets and become liable in case they lose investors’ crypto assets.
The EU is looking to be a standard setter for the crypto industry, and these new regulations – the organization believes – will lead the industry in the right direction. With so many ugly things happening in the crypto space as of late (bitcoin losing more than 70 percent of its value, the collapse of Terra USD, etc.) it appears the EU is doing all it can to bring order to a very speculative and volatile industry…
But there is a two-sided coin (pun intended) to this situation given that many individuals feel regulation goes against the very notions and ideas of crypto. This space was designed to give people autonomy and independence from third parties and standard financial institutions. By implementing regulation, this takes some of that independence away, and the space is beginning to show signs of becoming centralized, much like the financial organizations it long sought to overcome.
So naturally, not everyone is taking kindly to the new rules being offered. Robert Kopitsch – secretary general of the Blockchain for Europe lobby group – said the rules are not as fantastic as they’re cracked up to be. He mentioned:
Thanks to last-minute changes, we also fear that stable coins will basically have no ways to be profitable.
AFME – a financial markets industry body – was also skeptical, saying the rules would likely undermine a “well-functioning” and “robust” market, and more clarity was needed.
Circle’s Pretty Happy
Other crypto-based organizations – like Circle, the developer of the stable currency USD Coin (USDC) – were ecstatic about what the EU is working towards. In a blog post, Circle said:
While no comprehensive body of rules is perfect… it nonetheless provides practical solutions to issues other jurisdictions are just beginning to grapple with.