From Europe to Australia: legislators are gearing up
The mills of the law grind slowly but steadily. In the early years, the crypto market had the advantage that it could prosper wonderfully in the absence of legal regulations. Where there are no millstones, the mills of the law cannot grind. That is about to change – and the legislators are doing the same as the DeFis and are working on regulations on a global level, on a state level, but quite simultaneously.
Australia steps on the gas
Australia, for example, wants to create a legal framework for crypto by the end of the year as part of a major reform of the financial system. The declared aim of the crypto regulations is to protect investors from fraud and to strengthen companies in the sector, since crypto scams are the second most common form of fraud, and not only in Australia. Australia is moving quickly and wants the legislative framework to be in place by the end of the year. In doing so, Australia is joining a global regulatory initiative: In the US, Joe Biden signed a presidential decree on crypto regulation on 9 March 2022, and in Brussels, the EU almost banned Bitcoin with the vote on its MiCA regulation.
EU regulation of the crypto market
Mica (Markets in Crypto-Assets) is the name of the directive for the provision of crypto services, which in the meantime even provided for a bitcoin ban, which has fortunately been taken off the table again. “We are at the beginning of a changed financial behaviour and changed financial flows through tokenisation. This is exactly what Mica is supposed to regulate,” said EU parliamentarian Stefan Berger at a press event in mid-March. “The subject of Mica is not bitcoin, but the incipient tokenisation,” Berger clarified. And that is precisely where the problem lies: with a regulation formulated now, the EU cannot, in his view, grasp cryptocurrency that already exists. Only if the Mica Directive also regulates the issuance of new tokens and cryptocurrencies does it make sense, according to Berger, which also includes NFTs.
Time will come, regulation will come
Several steps are necessary before a regulation finally comes into force, starting with the agreement in the responsible Econ Committee of the EU Parliament. The committee then submits its draft to the Parliament before it passes the EU Commission and the EU Council. The biggest hurdle is already waiting at the first station: the plenary of the EU Parliament, as especially Green and Social Democratic MEPs want to stop the Mica proposal. Yet, according to Berger, unlike China and Turkey, the EU Parliament does not intend to ban cryptocurrencies.
What does Mica mean for the digital euro?
Like other countries, the European Central Bank is working on a digital central bank currency (CBDC), but this digital euro and the regulation of the crypto market in the EU are two separate projects: “A digital euro is indispensable,” says Berger. However, the technology on which the CBDC will be based is still up in the air.