The Biden administration recently released its framework on the regulation of crypto assets. The news comes mere months after the EU announced its MiCA framework. Such a dualistic approach to crypto regulation is one that deserves extremely careful attention and constant monitoring.
The introduction of some state-established clarity onto the market came in June of 2022, when the EU finally agreed on the draft of its MiCA regulation framework for crypto assets. The new legislation took into account virtually all players of the decentralized market and penned the rules for their operation and legal status.
The MiCA And Its Points
According to the new rules form MiCA, all CASPs, or Crypto-Asset Service Providers, will need to obtain special authorization for working inside the EU. The local authorities will be responsible for setting the legal status of each CASP and adding to appropriate lists. Minimum capital requirements were also stipulated for CASPs and vary greatly, depending on the size of the service.
The framework also regulates consumer protection, as CASPs are required to abide by strict requirements. The new rules are needed to prevent fraud and provide a measure of protection against manipulation and abuse of user rights.
Considerable attention was paid to stablecoins, which are considered a real threat to the EU’s economy and have been categorized accordingly as ARTs – Asset-Reference Tokens and EMTs – E-Money Tokens. All issuers of stablecoins will be obliged to provide adequate liquidity and asset backing to their supply at a 1 to 1 ratio. Needless to say, major stablecoin providers will be under the supervision of the European Banking Authority, and limits have been set on stablecoins issued in a currency not native to the EU in an effort at preserving sovereignty. As for NFTs, no coherent consensus was reached and such assets will receive a special category of their own, if they are not found to comply with any of the existing ones.
The DeFi sector will be closely monitored by the MiCA framework to prevent use of the sector for money-laundering and terrorist activities, with effective measures to be set in place within the coming years. AML and other procedures have also been reinforced as part of MiCA, further strengthening the positioning of the framework as a holistic regulatory solution for decentralized space.
Enter The US
The Biden administration has its own ideas on crypto regulation, which were introduced as a draft earlier this month. The new framework is more of a guideline for future laws and outlines the vision of the administration’s take on crypto market legalization and control.
The first section of the new framework is entirely focused on the eradication of any kind of illegal activities on the market. Some of the measures introduced are quite stringent and include oversight of NFTs through the amendment of the Bank Secrecy Act. New penalties and taxes are also foreseen for any unlicensed monetary operations, and illicit finance risk assessment measures aimed at DeFi.
An interesting section of the framework is focused on a Dollar-pegged CBDC, stating that it may bear significant benefits for the US economy and national currency, hinting at the creation of a digital dollar in the future. Such an outlook instantly points to the possibility of the new Dollar-pegged stablecoin eliminating need for other stablecoins and cryptocurrencies altogether. The approach to embracing crypto under the banner of a US-led market seems quite realistic, considering the US government’s continued attempts at regulating and taking full control of the decentralized industry.
The frameworks introduced by the US and EU are not entirely different from one another, however, the latter is considerably more advanced and user-friendly, while the former looks to be taking the threatening form of a digital dictatorship. Though it is early to judge the US framework, which is still only at the first draft stage, the EU is currently in a better position to attract crypto projects with its clearer and friendlier MiCA framework.