Bitcoin (BTC) and cryptocurrencies should be considered as transferable securities in the countries of the European Union. Therefore, the regulations that apply to traditional stocks and bonds would also have to be applied to these digital assets.
so it points the most recent report by the European Parliament (EP), published shortly after the Crypto Asset Market Regulation (MiCA Law) receive the approval of this legislative instance.
The report states that the National Competition Authorities (ANC), which are the bodies that enforce the laws in EU member countries, have full jurisdiction over the activities of crypto asset operators. Such a fact would give the ANC authority to implement a “default rule”.
With this regulation, it would be established that all crypto assets in the market “be considered, first-hand, a transferable security,” according to the Parliament report.
Crypto assets and operators subject to various regulations
If the proposed regulation is adopted, the crypto assets considered as securities and the respective service providers with these assets, would be subject to the provisions of various regulations.
Among them is that of the financial markets (MiFID/MiFIR), the regulation of prospectuses (which must be published in the event of a public offer or listing of securities), the regulation of market abuse and the transparency directive.
These guidelines are typically followed by issuers of bonds and traditional stocks listed on European stock exchanges.
In addition, if the rule is implemented, companies dedicated to the exchange of crypto assets classified as securities that operate in the EU must have a license. While the rules of the 2nd Directive on Financial Instruments Markets (MiFID II) will apply to companies that offer escrow services.
Not satisfied, the PE says that “the ANCs have the right to order all service providers with virtual assets and issuers to provide them with information.” The above, whether crypto assets are considered transferable securities by default.
The rule proposed by the PE comes after the MiCA Law was approved by that same legislative body and later by the Council of the EU. Also, after it was enacted as EU law.
This regulation, which took just over a year and a half to finalize its legislative process, does not regulate all crypto assets. In fact, the regulation left out bitcoin (BTC), ether (ETH) and other crypto assets.
The two most important cryptocurrencies in the market were excluded as they were considered financial instruments. Thus, will be regulated by traditional securities laws.
You can learn more about the MiCA Law by visiting our Cryptopedia.