EU’s MiCA law will regulate NFT collections like cryptocurrency

EU’s MiCA law will regulate NFT collections like cryptocurrency
Image Credits: CoinDesk

During a panel at the Korea Blockchain Week on Tuesday, European Union Advisor Peter Kerstens announced that NFT collections will receive the same treatment as cryptocurrencies under the Markets in Crypto-Assets (MiCA) law, requiring express authorization from the EU before sale.

Kerstens explains: “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.”

NFT holders, now officially crypto-asset service providers (CASPs), will be required to submit regular accounts of their activities and a white paper detailing the NFT protocol to the European Securities and Markets Authority (ESMA) at their local governments. According to the press release, “this regulatory framework will protect investors and preserve financial stability, while allowing innovation and fostering the attractiveness of the crypto-asset sector.”

Holders are also forbidden from offering any promises on the value of any given NFT project that would mislead people into buying them.

Despite previous claims that NFTs would be excluded from MiCa, these regulations aim to limit instances where crypto assets are used for money laundering and other illicit purposes such as wash trading.

Originally put forward by the European Commission in September 2020 and finalized in late June, MiCA were made to protect consumers on an EU-level against some of the risks associated with the investment in crypto-assets. Ernest Urtasum, a member of the European Parliament, explains that through MiCa, “we will have a common harmonized EU-wide regime for crypto-asset issuers and service providers, that will provide security for investors and support sustainability, while reducing fragmentation and increasing legal clarity.”

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