On August 2, during a panel at Korea Blockchain Week, European Union (EU) Advisor Peter Kerstens offered new insights into the EU’s attempts to create broad regulatory measures in the crypto and NFT spaces. According to Kerstens, under the Markets in Crypto-Assets (MiCA) law, NFT collections will receive the same treatment as cryptocurrencies.
1. Introduction:
The new European Union law will require all crypto-asset service providers (CASPs) to obtain “express authorization” from the EU. Authorized parties must prove that they have a solid legal position in the EU, with regard to collecting and transmitting personal data.
The law is intended to apply to all crypto-asset service providers operating within the territory of the EU and those located outside of it.
2. What are NFTs?
NFTs are virtual things, such as “an object of value” or “a digital representation of an actual thing”. This is not to be confused with the term “digital currency,” which refers to a digital representation of a physical exchangeable item. NFTs can only be sold if they fall under the guidelines by the Financial Services Authority (FSA) and are not considered a security.
3. What is the EU’s new law?
The new General Data Protection Regulation (GDPR) will come into force in May 2018, with many businesses and individuals still not fully aware of its scope. The GDPR will become a global standard for the regulation of data protection. Here’s everything you need to know about GDPR and what it means for your business.
4. What does this mean for NFT collectors?
The European Union has set up a task group to prepare draft legislation that will regulate non-financial transactions, such as those involving digital currencies, through a system of intermediary service providers.
The draft legislation is expected to be adopted in early 2018, and will be amended by the end of the coming year. The proposed new rules aim to help ensure that consumers have a reasonable amount of time to decide whether or not to purchase an item before it is sold for more money than it was worth.
The European Commission’s Joint Research Centre (JRC) has drawn up the proposed rules, which first looked into this area in 2016. The Commission published its results in 2017 and invited comments from interested parties before preparing the draft legislation for its adoption. A set of technical specifications has also been released on the JRC website.
In addition to introducing new regulations, the EU’s new rules will also seek to prevent automated trading bots from being used as a means of money laundering and illegal financing. The Commission added that banks would not be allowed to “provide financial services through intermediaries even if they are able to monitor all financial transactions and do not provide services directly related to money laundering or terrorist financing”.
5. What are the benefits of this new law?
The new European Union law, the e-Privacy Directive, requires that data subjects have a ‘reasonable expectation of security when dealing with their personal data. The Directive also aims to limit minors’ ability to access and use personal data.
The e-Privacy Directive specifies that an individual must be able to exercise a choice about which data is collected about them. The Directive does not determine what types of data may be collected or how it is collected. This means that no one can clearly be identified as containing any data type such as IP addresses, cookies or geolocation information.
The law has been under consideration since 2016, when the European Parliament approved it by a vote of 488 votes in favor, 15 opposed and 59 abstentions. It took effect in October 2017 and will come into force on May 25 2018.
6. What are the drawbacks of this new law?
The new European Union law on collection of personal data will regulate NFT transactions in the same way as cryptocurrencies, and like this new law, there are transaction costs to both parties (buyer and seller).
In short, there are four main drawbacks of this new EU law:
- It creates a licensing regime for crypto-asset service providers.
- It creates a different tax system for the seller than the buyer.
- It creates a licensing regime for crypto-asset service providers, traders, and market makers.
- It creates a different tax system for crypto-asset service providers who are traders and market makers than ordinary traders.
Conclusion
EU citizens who want to put up for sale an NFT are not just limited to cryptocurrencies; in the future, we may see several services added to the list, including those that enable users to save digital music and video, manage their digital health records, and keep track of digital objects.
The new law is part of a broader effort by the European Commission to regulate the crypto-asset ecosystem to foster growth in this fast-growing industry. The Commission has also published a white paper outlining proposals for how this can be accomplished.