Reaching a provisional approval on the scope and direction of the MiCA proposal, the EU has brought virtual assets and VASPs under a common regulative system. These legal mechanisms that focus on regulating the risks related to crypto-assets, will guarantee the security of crypto holders and safeguard the smooth operation of the crypto market, whilst providing for innovations and assess to the crypto field. This will make the EU market more transparent, as some EU states already adopted a law for virtual currency at the national level, but so far there had been no separate legal mechanisms at the international EU level.
MiCA will guarantee the legal safety of crypto holders against some of the risks related to dealing with cryptocoins and assist them to prevent being engaged in fraudulent schemes. As for now, holders are granted not a lot of rights to protection or redress, particularly when it comes to the transactions taking place outside the EU. Under the new legal system, VASPs are obliged to adhere to a number of obligations to ensure the investment security of holders and bear liability if they lose these digital assets. The new rules will also refer to any type of market manipulations (breaking the stable operation of fin. markets and lowering crypto holders` assurance) in the respect to any type of payment or activity provided, notably for illicit sharing of private data and illegal trade.
Participants in the cryptomarkets will be obliged to report on their ecological footprints. Accordingly, the ESMA, an EU body whose purpose is to enhance investor secutiry and promote stable market operation, will introduce standards of what should be encompassed, which methods should be applied, and how to present the details related to principal adverse ecological and climate-related impacts. Further, in two years, the EU Commission will have to submit a report on the ecological impact of cryptocoins and the establishment of obligatory minimum sustainability merits for fault-tolerant structures used in a blockchain, including the proof-of-work among others.
MiCA does not duplicate the AML provisions as stipulated in the recently updated transferring of funds obligations in regulating the risks related to crypto-assets. Aiming to avoid any overlaps with revised law on AML standards, which will since now also encompass cryptocoins, MiCA necessitates that the EU Banking Authority will maintain a publicly accessible registrar of VASPs that are not compliant. VASPs, whose holding corporation is domiciled in countries included in the EU list of 3rd countries deemed as those possessing high risks for AML/TF operations, as well as in the EU list of non-cooperative states for taxation considerations, will be forced to execute a number of appropriate checks in accordance with the EU AML framework. Stricter obligations in terms of regulating risks related to crypto assets may also be appertained to shareholders and the directors of VASPs, particularly concerning their localization.
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