Digital finance package strategy

Latest Developments

September 2020 – proposed legislation published by the European Commission

Summary

The Digital Finance Package Strategy aims to address the need to drive and harness digital transformation within the EU financial sector by promoting new opportunities and tackling the risks and benefits to consumers and businesses, while ensuring an integrated and level playing field for existing and new market players. As part of the Digital Finance package, the European Commission published a proposal for a Regulation on Markets in Crypto-assets (MiCA), aiming at creating an EU framework for crypto-assets falling outside the scope of existing EU financial regulation, as well as e-money tokens. This regulation considers within its scope:

1.  e-Money tokens that are intended primarily as a means of payment aimed at stabilising their value by referring only to a single fiat currency
2. Asset-Referenced tokens, intended to maintain by referencing several currencies that are legal tender, one or several commodities, one or several crypto-assets, or a basket of such assets. They could also be used as a means of payment
3. Utility tokens, intended to provide digital access to a good or service available on distributed ledger technology (DLT), are included in the scope of MiCA only if fungible and transferable

Non-Fungible Tokens - whose value is attributable to each crypto-asset’s unique characteristics – are excluded from the scope of MiC.

In any case, the European Commission is mandated to prepare a comprehensive assessment of the rules applicable to the NFT market and, if deemed necessary, will present a specific, proportionate and horizontal legislative proposal to create a new regime for NFTs and address emerging risks.

The proposal for Regulation on Markets in Crypto-assets sets out: (1) rules for issuers and offerors of crypto-assets; and (2) rules for entities that provide services related to crypto-assets (exchanges, trading platforms, custodial wallet providers etc.)

How could it be relevant for you?

The EC regulatory proposal has as its first objective the creation of legal certainty for crypto-asset markets within the EU. This regulatory framework will further push the tokenization of the digital economy, opening up a huge variety of ways to rewrite economic relationships. Tokenization makes it possible to carry out "peer-to-peer" (P2P) operations by creating, issuing and transferring "digital tokens" (crypto-assets) in a decentralised network (Distributed Ledger Technology systems), protected from the risk of theft, tampering or hacking.

In any number of ways cryptocurrency and digital payments have fast become a popular space in modern society and a household digital asset. Behind the legislation, regulation and investment are the tangible topics of intangible assets that organisations and individuals deal with day-to-day

Next steps

The Council Presidency and the European Parliament reached a preliminary agreement on the MICAR proposal on 30 June 2022.

The Council’s Coreper endorsed on October 5, 2022, the final compromise text with a view to an agreement.

The adoption is now subject to the European Parliament's position in the first-reading.

According to the EU legislative procedure, should the European Parliament adopt its first-reading position in the form indicated in the compromise package, the Council would approve the position and adopt the Act.