Non-fungible tokens (NFTs) will have to apply new European Union crypto rules aimed to protect investors from risks. Last week, a panel was held at the Korea Blockchain Week. During that panel, European Union Advisor Peter Kerstens announced that NFT collection will be treated as the cryptocurrencies are regulated under the Markets in Crypto-Assets – MiCA law.
Kerstens stated that if any token is issued as a collection or series, the requirements will apply. Even if the issuer can call the series or collection as NFT and the individual token may be unique.
What Is The MiCA law About?
Now, NFT holders will need to submit their regular account’s activities along with a white paper that will provide details of the NFT protocol to the European Securities and Markets Authority (ESMA) at their local governments.
The published press release stated that the regulatory framework will take responsibility to protect investors and will preserve the financial stability of the investors. Alongside, it will open innovation and foster the attractiveness of the crypto-asset sector.
Holders have interdicted any offer on the value of any given NFT project that might mislead users into buying that.
The previous claim was that NFTs would be excluded from MiCA law. But now these regulations focus on limiting crypto assets for money laundering activity and other illegal activities.
The regulations were put forward by the European Commission in September 2020. Now it was finalized in late June of 2021. Mica law came in force to protect users on an EU level against some of the risks regarding the investment in crypto-assets.
Theoretically, the MiCA’s final draft excludes NFTs from the regulation. But NFTs are considered similar to the other crypto assets. Though, they are not exactly NFTs.
Notably, the recent statement from Peter Kerstens who is an official in the European Commission arises sensation. Kerstens believes that the policymakers in the EU are unable to know much about NFTs. That is why the exemption is going to favor only specific assets.
Alongside, the team said that the requirements of the MiCA law would apply to tokens issued as a series or collection of assets. Even if the issuer says the tokens in the collection are unique, that will not be accepted. The issuer of NFT collections must publish a white paper. The issuer will detail the NFTs’ operating protocol in that particular white paper. Along with this, the legislation forbade the issuers to make false and misleading benefits about the NFTs.
Previous Scenario :
Earlier, the National governments in the EU attacked the ideation of taking NFTs in the MiCA law. The bill was aimed to protect investors in ICOs or Initial Coin Offerings and stablecoins. According to them, adding NFTs will not be justified. Though, the signer of the bill, the European Parliament officials were rigorous. They believed that the NFT platforms are centers of price manipulations such as wash trading.
The European Commission earlier released the MiCA law in 2020. But the approval took much time. From 2020, there have even multiple discussions regarding the amendment of the legislation.
Furthermore, the Korean regulation body is still Ambiguous about how to regulate the crypto market. As US and EU have already introduced several bills regarding these issues, Korea is assumed to take a cue from them.
Japan had brought their crypto regulation earlier. Few countries have managed to regulate this virtual asset platform. Though, the ‘decentralized’ term is the main obstacle to regulating these sectors. Centralized can be governed by the authority in various ways. The crypto and NFT platform are nowadays one of the user virtual spaces for financial aspects. But the lack of regulation becomes the main hurdle to security. It leads the market towards massive scams, laundering, and hacks.