EU passes crypto law with prescribed white papers, free airdrops and NFTs – Trustnodes

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The European Union has become the first in the world to pass comprehensive crypto legislation, bringing much-needed clarity to the industry.

Exemption for airdrops and native blockchain tokens, e-money regulation for stablecoins and prescribed white papers are some of the key distinguishing features of the new Crypto Asset Markets Act (MiCA) .

“In order to ensure a proportionate approach, no requirements of this Regulation should apply to the offering of crypto-assets, other than tokens referenced to assets or e-money tokens, which are offered for free or which are created automatically as a reward for maintaining DLT or validating transactions under a consensus mechanism,” the law states, adding:

“When making a public offer of crypto-assets, other than asset-referenced tokens or e-money tokens, in the Union or when applying for the admission of crypto-assets to trading on a platform trading for these crypto-assets, offerors or persons seeking admission to trading must produce, notify their competent authority and publish an information document (a white paper on crypto-assets) containing the mandatory information.

This white paper on crypto-assets should contain general information on the issuer, the offeror or the person seeking admission to trading, on the project to be carried out with the capital raised, on the public offer of crypto- assets or their admission to trading on a trading venue. for crypto-assets, on the rights and obligations attached to the crypto-assets, on the underlying technology used for these assets and on the related risks.

For stablecoins, “the function of these crypto assets is very similar to the function of electronic money, as defined in Article 2(2) of Directive 2009/110/EC of the European Parliament and of the Council”. They therefore define them as electronic money and apply this directive.

NFTs are exempt from this law, so the art can continue to thrive in Europe, with the UK likely to take much the same approach.

No more SEC, make way for Europe

The passage of this law comes as the crypto industry is engaged in fierce battles with the United States Securities and Exchanges Commission (SEC), which is engaged in numerous courts and committees.

Unlike the opinion-based approach of whoever happens to be the current head of the SEC, the EU applies the rule of law and follows due process.

In a reasonable way from what we can see, although we must admit that we have not yet read the entire 376 pages of the attached document.

Still on the surface, the law strikes a warm tone, stating “that by streamlining capital-raising processes and enhancing competition, crypto-asset offerings can enable an innovative and inclusive mode of financing, including for small businesses. and medium-sized enterprises (SMEs). .”

It says the framework “should enable crypto-asset service providers to develop their businesses on a cross-border basis and should facilitate their access to banking services to conduct their business.”

Furthermore, this applies to the whole of the European Union, a market of around 14 trillion dollars. Other EU neighbours, such as Norway, Switzerland or the UK, will follow a similar approach, making it an overall market of around $20 trillion that largely strikes the right balance.

The airdrop exemption is quite significant as it brings certainty to defi that these airdropped tokens are not securities and they don’t even need to issue a prescribed white paper as usually these tokens are airdropped when there is has an already running platform that tends to have open source code, which makes it much better than a whitepaper.

This law facilitates capital formation in innovative crypto frontiers by not requiring registration with the new and future equivalent of the SEC called the European Securities and Markets Authority (ESMA).

Instead, these entrepreneurs just have to issue a prescribed white paper, which they did anyway, but now there’s the potential hammer of the law because the white paper has to be precise.

The NFT exemption brings certainty to this brand new area, and even when it comes to stablecoins, no bUSD will be shut down here because they can just follow the guideline, just like a euro stablecoin startup does.

The rest then is what you’d expect in terms of exchanges needing to be robust so that their CEO doesn’t just take or “lend” their clients’ funds, and if capital formation happens through a centralized entity or in a centralized way it is then a question of a title in the same way as the real titles.

In the United States on the other hand, due to complete uncertainty and because Gary Gensler is clearly a buttcoiner, everything is a security, even pictures of cats.

But entrepreneurs in this space no longer need to worry about the United States. There is a huge global market that has the clout to set global standards, as these cookie banners now found everywhere show, and within that there are some 27 Member States with their own taxation rules, like no capital gains if you hold for one year in Germany.

You can choose any of them, and just like that, the SEC “we won’t innovate for you” becomes the nightmare that was and is no longer.

Instead of ESMA. This MiCA legislation is also a very big step for Europe, because the financing is finally done at European level.

They have tried and are still trying to get a banking union, a capital union, but things are still moving very slowly, even as far as equities are concerned.

For example, it is difficult to obtain public information on listed European companies without going through the user interface of Member States’ SECs, usually from the 90s, which is very inefficient and a barrier even for someone like us who works in the field of information.

Sooner or later ESMA will take care of this aspect, because it is necessary for EU capital markets to complement each other, but when it comes to the crypto industry, we don’t have to wait any longer because we will be the first to experience the capital union. in cryptographic aspects.

This is a subtle step for Europe, but quite a significant one in its current position, and when it comes to VCs, entrepreneurs, and more, Europe is now where to be for global crypto.

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