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Summary
- By the end of the month, the EU should have clear laws on how to regulate cryptocurrency income and investments, as per a leaked version of a European Commission draft.
- Markets in Crypto Assets (MiCA) has suggested that cryptocurrency should be considered as any other financial instrument.
- Some experts think that this legislation will cause disruption of crypto growth, while the regulation suggests that it will ensure crypto growth and regulation at the same time.
- As people have switched to contactless payments during the pandemic, European Central Bank President Christine Lagarde thinks that this approach will only gain more popularity over time.
Not so long ago, most nations did not completely regulate cryptocurrencies. However, a recently leaked European Commission draft suggests that the EU will soon have laws and regulations that will monitor the capital gained from these digital assets.
Do read: What is a cryptocurrency and how to use it?
What is going to happen?
According to the leaked draft, the new set of rules would be issued by the end of this month. Markets in Crypto Assets (MiCA) in Europe proposed that every cryptocurrency should be treated as per any other regulated monetary instrument.
The newly proposed regulation will have a straight-to-the-point set of rules, with cryptocurrency to be considered as every other investment or capital.
Also read: Types of Cryptocurrency- Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin And Ripple
While cryptocurrency regulation might seem to make investors more confident about crypto investments, some experts argue that it might do the complete opposite – obstruct its growth and value.
Unlike Markets in Financial Instruments Directive (MiFD, the European institution that is making sure European financial markets are transparent), MiCA recommends that a definition should be made about what crypto assets really are, followed by how they should be regulated for those showing interest in crypto investments.
The legislation will apply to all cryptocurrencies, people who in some way deal with them, as well as to exchange markets, cryptocurrency platforms and service providers. The principles for service providers may appear similar to the cryptocurrency definition of the Financial Action Task Force (FATF).
The new legislation is designed to maintain the cryptocurrency technology growth, while regulating it at the same time.
Are cryptocurrencies getting more popularity?
European Central Bank’s President Christine Lagarde in an online conference with the Deutsche Bundesbank stated that people have changed their opinions during the pandemic, regarding new ways of payments due to hygienic reason. People have shown more interest in contactless payments, which are likely to get even more popular.
Interesting read: Bitcoin – The Direction It Will Take In 2020 And Beyond
She added that Europe is still not as advanced when it comes to using more digital currencies.
China’s Central Bank has already started trials on implementing the digital currency as a way of regular payments and is currently testing the approach in richer cities in the country.
