The Great Debate: Treating Crypto Assets as Securities by Default in the EU

Intricate European Parliament building, lawmakers in discussion, crypto assets transforming into traditional stocks, bonds, and diverse digital items like NFTs, DeFi, and DAOs. Baroque art style, chiaroscuro lighting, hints of skepticism and uncertainty in facial expressions, high contrast colors represent regulatory debates and evolving landscape.

The future of crypto assets and their regulatory status has been a widely-discussed topic in recent years. One interesting proposal comes from a study commissioned by lawmakers at the European Parliament, which suggests that crypto assets should be treated as securities by default. This would mean that unless a national regulator decides otherwise, all crypto assets would fall under the European Union’s (EU) stringent governance and authorization rules, which are already applicable to traditional stocks and bonds.

The report, authored by a group of scholars from universities in Luxembourg, Sydney, and Hong Kong, highlights the challenges in regulating an industry characterized by a complex cross-border context. The authors posit that by shifting the responsibility of gathering technical facts and arguing the scope of the regulations from authorities to industry, it would be easier to achieve meaningful short-term effects. Despite this, the researchers express skepticism regarding the efficacy of the proposed Markets in Crypto Assets (MiCA) regulation without modifications, given the multitude of crypto protocols competing for more lenient regulatory oversight.

One of the key drivers behind the push for clearer crypto regulations is the ambiguity surrounding whether traditional financial security rules apply to digital assets. For instance, in the United States, the Securities and Exchange Commission’s Chief Gary Gensler has not confirmed whether major cryptocurrencies, such as ether (ETH), should be classified as securities under his jurisdiction. This uncertainty has led to some companies, like Ripple, facing legal actions and allegations of regulation by enforcement.

As the EU finalizes its MiCA regulation, questions remain about whether additional legislation will be required to cover decentralized finance (DeFi), staking, and non-fungible tokens (NFTs). The European Systemic Risk Board, an EU panel responsible for monitoring financial stability risks, has already called for further laws to address gaps in the MiCA framework. Meanwhile, in the United Kingdom, experts have been exploring the legal status of decentralized autonomous organizations (DAOs), which the report describes as a “Wild West” filled with “fraudsters and

Source: Coindesk

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