Situations Like The Terra Crash Could Be Avoided In The Future Through MiCA Bill

Given the rapid growth of the crypto and blockchain sector, governments all over the world are searching for viable ways to regulate the industry, including the European Union which recently provided their contribution to solving the issue via the MiCA (Markets in Crypto Assets) bill. Also, both the SEC and CFTC agree that cryptocurrencies are not going anywhere and that it is high time to regulate these assets properly, with the CFTC chairman even claiming that the agency is prepared to begin regulating crypto as soon as possible.

This increase in the number of regulatory policies is the result of various factors, including the recent market crash and the mainstream attention being given to crypto and digital assets in general.

Why is the new bill important and what can it do?

According to the European Commissions Cybersecurity Policy and Technological Innovation Advisor, Peter Kerstens, if the bill is passed then it shall bring numerous changes to the market, including the implementation of stringent standards designed to avoid situations like the Terra disaster, in addition to viewing NFTs as digital assets similar to cryptocurrencies.

Peter stated that the $40 billion Terra ecosystem meltdown would not have occurred if the MiCA bills provisions, which necessitate stablecoin projects to become more transparent as well as enable client withdrawals on request, had been in place. Due to this, MiCA would reportedly be able to prevent such schemes from entering the market, according to the advisor.

It should also be noted that the proposed rules and regulations outlined in the MiCA bill are set to become law in 2023, but are not expected to be fully implemented throughout the EU until at least 2024.

What about NFTs?

The MiCA bill outlines regulations for cryptocurrencies but it does not ignore NFTs either, as Peter pointed out that EU legislators have a very narrow definition of what an NFT actually is. According to the advisor, in the event that a token may be issued as a series or collection, even if the issuer calls it an NFT and every individual token within that particular series is indeed unique, it is still not considered as an NFT and the requirements would therefore still be applicable.

To put it another way, should the bill be passed, NFT issuers would be required to publish a whitepaper detailing all of the specifics concerning the underlying protocol as well as all relevant details. Additionally, it would prevent the issuers from making misleading or overly optimistic claims regarding the NFTs future worth.

Ultimately, many in the crypto and NFT community believe that this is a positive development as MiCA has the potential to finally eliminate scams and other kinds of fraudulent entities which would hence shift the focus to worthwhile and profitable projects which provide real value.