The European Union Is Considering Ground-breaking Rules To Regulate Crypto.
The European Union will consider agreements on regulations meant to regulate crypto assets. This is because the significant dip experienced by cryptocurrencies increases pressure on various authorities to focus on the sector.
On a global scale, crypto assets are not regulated. The major operators in the European Union only required to indicate strategies for dealing with money laundering.
An agreement would put the European Union at the forefront of international regulation by providing issuers of assets and other crypto-related services with identifications to cater to consumers across the continent from a single base while adhering to regulations dealing with consumer protection and added capital.
Industry regulators state that clearly defined rules and identification could attract crypto investors from Britain.
Regulations Are Yet to be Approved
The US and Britain have yet to approve the regulations.
On June 7, a bill that would create new regulations for cryptocurrencies and enable the Commodity Futures Trading Commission (CFTC) to provide oversight was unveiled.
The bill was introduced by Democratic Senator Kirsten Gillibrand and Republican Senator Cynthia Lummis. It was one of the first ambitious initiatives by lawmakers to develop clear guidelines on the volatile cryptocurrency market.
This would allow the CFTC to act as the primary regulator of crypto products. In the agreement, most of which senators agreed are more like commodities than securities.
The European Union’s representatives and member states will meet to formulate a deal on the market’s crypto assets law.
Therefore, this will take place in 2023 if it is successful.
A source privy to the discussion stated three remaining issues: supervision, non-fungible tokens, and energy use.
A deal will most likely concentrate on adding tokens like NFTs in the crypto assets law. This will be done with supervision and authorization of crypto organizations within the member states.
The European Commission would also assess the crypto assets’ energy imprint.
Organizations operating in The European Union will have 18 months after the set date to acquire a MICA license without disrupting their operations.
There Was A Lot Of Pressure On Crypto Assets
The collapse of Luna tokens and TerraUSD the previous month led to much pressure on crypto assets.
This compelled the US cryptocurrency lending company Celsius Network to freeze transfers and withdrawals.
The company, known for its retail crypto lending platform, experienced liquidity issues that sent cryptocurrencies on a dip.
It undertook complex investments in the digital asset market, and according to analysts, this was similar to a conventional bank run.
The company froze transfers and withdrawals between accounts due to extreme market conditions.
Initially, this was a plan to “stabilize liquidity.”
In a video recently released by the company, its finance chief stated that Celsius and the industry at large had witnessed the rise of redemptions after the TerraUSD collapsed in May.
Cryptocurrencies Have Dropped Significantly in Value
The value of cryptocurrencies has dropped by more than $400 billion.
Like banks, Celsius collects crypto deposits from retail consumers and places them in the wholesale crypto market, including DeFi or decentralized finance sites that utilize blockchain technology to provide services from insurance to loans outside the conventional financial sector.
Unlike banks, the company promises its clients huge returns, which could go as far as 8.6% annually.
The thought of making big profits led many investors to redirect assets to the company and other similar avenues.
According to its website, the company’s CEO Alex Mashinsky revealed in October that the organization had $ 25 billion in assets though this had dropped to $11.8 billion in the previous month.
Bitcoin dropped this month to $17,600 and is now trading at $19,066, well below its level in March, which was $48,200, leaving many people counting their losses.