European Commission to Negotiate Scope of NFTs & Private Wallets in Crypto Regulation

  • Richard Marley
  • June 29, 2022
  • 2 minutes read
  • 874

Members of the EU Parliament, the European Commission, and state representatives are all set to negotiate the scope of Markets in Crypto Assets regulations (MiCA).

As per reports from CoinDesk, the meeting is expected to take place this week on Wednesday and Thursday. 

The meetings will take place a week before the EU Parliament hosts the last plenary session before the summer recess and a few days before France hands the presidency of the EU Council over to the Czech Republic. 

Many lawmakers, and especially the French government, which has been pushing for the adoption of MiCA during its term, are hopeful that the parties will reach an agreement on several issues during these meetings. 

There are several topics to be discussed about MiCA, but talks this week are likely to focus on two issues: how to treat non-fungible tokens (NFTs) and the private use of unhosted wallets. 

On Wednesday, EU negotiations will talk about anti-money laundering provisions in the so-called “travel rule” for crypto assets. The EU Parliament approved in March a proposal that increased the information requirements that crypto asset providers will need to collect and share for each transaction, regardless of the amount transferred. 

There is still room for changes, if needed, as the EU parliament approved its negotiating position with the other institutions, but parliament and council could still amend the legal text. This could include the application of the travel rule to wallet providers as well as crypto exchanges, which may be part of the conversation this week.

The main issue to be resolved is how to treat transfers made to and from “unhosted wallets,” which are private means of storing crypto assets that aren’t managed by a regulated service provider. 

Proponents say that the final text will uphold the principle of verifying customer identity, but this approach presents challenges. Other details to discuss may be the monetary threshold that would trigger reporting, which could differ from that of other crypto exchanges, and if the details of both sender and receiver should be disclosed or only one of them. 

Suggested read: EU Strengthens Capacity of CSOs to Combat Money Laundering & Improve Governance