- EU mulls the idea of bringing NFTs under the markets in crypto-assets (MiCA) laws for crypto regulations in the region.
- Some market experts believe that doing so could stifle innovation in the NFT space and lead to undesired oversight of the crypto sector.
The European Union has been actively working to bring crypto regulatory rules under its markets in crypto-assets (MiCA) laws. As per the latest report, the EU is also planning to bring non-fungible tokens (NFTs) under the new crypto laws.
NFTs have turned extremely popular in the crypto space over the last year. These are blockchain-based digital tokens that represent unique things and provide digital ownership of assets. Speaking at the Korea Blockchain Week this week, an EU official said that non-fungible tokens (NFTs) will be part of new crypto rules.
However, previous talks suggested that ownership of innovative tokens be excluded from the bloc’s newly agreed Markets in Crypto Assets (MiCA) law. Concerning MiCA, the EU struck a political deal by the end of June 2022 on how to treat NFTs. Although the deal settled the major aspects of the law, there’s no text available yet for the same.
As per the final draft of the official declarations, the law exempts non-fungible tokens (NFTs) unless they constitute some other kind of crypto asset. European Commission’s Peter Kerstens told that the EU regulators have “a very narrow view of what is an NFT”. He also hinted that a few assets could benefit from the MiCA laws exemption.
If a token is issued as a collection or as a series – even though the issuer may call it an NFT and even though each individual token in that series may be unique – it’s not considered to be an NFT, so the requirements will apply,
What if MiCA laws are applicable to NFTs?
The implementation of MiCA laws to non-fungible tokens (NFTs) would change a lot more things for this sector. NFT issuers might also have to release a whitepaper explaining the details of the protocol. They would also not be able to make outlandish promises on the future value of NFTs.
Kerstens previously said that it would be absolutely “silly” to have a whitepaper for every NFT. Furthermore, NFT marketplaces like OpenSea would also have to seek regulatory authorization which could possibly stifle innovation in the nascent industry.
Some of the EU national governments also feel that including NFTs under MiCA laws would be an unjustified oversight of a bill primarily designed to protect investors in ICOs and stablecoins. However, lawmakers from the European Parliament believe that NFTs are more prone to securities-style manipulation such as wash trading.
Another major sector that has turned into a worry is the crypto lending and staking market. Several other economies have been looking closely into how the NFT market is developing. Interestingly, anti-crypto China is showing interest in non-fungible tokens (NFTs) while trying to standardize the market.
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