Cryptocurrency News, Cryptocurrency Regulation, DeFi (Decentralized Finance), Finance News

EU Seeks To Explore Decentralized Finance Regulation

Patrick Hansen, a policy adviser at Circle, posted a tweet about the EU’s intention to supervise DeFi. The commission released a tender to research technological abilities to monitor DeFi activities. The cost of study, which will last 15 months according to the tender, is €250,000. 

EU To Inquire Into DeFi

The EU published a contract note on its website containing information about the research. The memo raised awareness about the need for qualified personnel to jump into the vehicle. These individuals will execute a pilot program focused on evaluating DeFi solutions. 

It will test the significance of technology in regulating Decentralized Finance on the Ethereum chain. According to the note, Ethereum is a general hub for DeFi projects. It also cited tapping into the openness of blockchain information. 

European Union officials are looking to promote real-time monitoring of DeFi. Meanwhile, this will be an automatic procedure as intended by the commission. With this, they can gather information on Decentralized Finance using technical accessories. 

Hansen further stated that the technological outcome of this project would be significant. It will enhance conformity as expected from involved individuals. Also, participants won’t need to collate, attest, and release data to the overseers. 

Decentralized Finance occupies a vaguely defined position in the crypto sphere. As a result, software programs lacking collateral cannot adhere to KYC and AML laws as CeFi. Meanwhile, Centralized Finance projects must conform to Know Your Customer and Anti-Money Laundering regulations. 

Ultimately, this poses a default in the financial system. It also impedes regulators from detecting active crimes like money laundering or terrorism financing. In turn, it allows for further exploitation of the space for improprieties. 

EU Assents To Digital Assets Regulations

EU, on October 5, consented to the Market In Crypto Asset (MiCA) legislation. Once approved as law, it would project a regulatory structure for cryptocurrency in Europe. Parliamentary members of the union will vote on the bill on October 10. 

MiCA is a far-reaching regulation that seeks to subject digital assets to the ESMA’s oversight. European Securities and Market Authorities and the European Banking Authority will work together to implement this law. The bill will address the categories of cryptocurrencies as either commodities or securities.

Digital assets fall into four groups, according to the bill. They include utility tokens, crypto assets, electronic money tokens, and asset-referenced tokens. Cryptocurrency control will be according to their class.

An aspect the bill focuses on is stablecoin issuance. The European Banking Authority is responsible for this part. MiCA stipulates issuers of stablecoins stick to minimum liquidity to avoid a replay of TerraUSD’s incident.

However, section 12a of the enactment clarified Decentralized Finance’s position. It noted that DeFi-integrated projects are not in the regulatory structure. Notwithstanding, the EU is still interested in administering this section.

They seek to accomplish this via the supervision program proposed for DeFi projects.

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