Thread by @6529Guardian

gm and Happy Thanksgiving!

On the regulatory front, #NFTs had what looks like a positive development in the EU. Although this is not final.

6529Guardian is a former regulator and devotes time to keeping up with the latest IRL regulatory developments affecting #NFTs (so you don't have to and can enjoy the metaverse).

There is a major, comprehensive regulation for cryptoassets and stablecoins that is advancing in the EU known as "MiCA" (sometimes MiCAR) - this is acronym for the "Markets in Crypto-asset" Regulation proposal. eur-lex.europa.eu/legal-content/…

In the EU, a "regulation" is actually a law that is binding across all member states. This is different from other countries where a "regulation" is considered secondary to a law, and is issued by an agency or regulator rather than adopted by legislation.

Yesterday, new legislative text emerged or was leaked and it says this: "2a. This Regulation does not apply to crypto-assets that are unique and not fungible with other crypto-assets."

This would mean that the proposed new MiCA regulatory framework for stablecoins and crypto-asset service providers and crypto-asset issuers generally would not apply to NFTs.

So NFTs would not get caught up in this sweeping regulatory framework. NFTs would generally not be treated as financial products or regulated products.

More good news: the explanatory background text says this:

"This Regulation should not apply to crypto-assets that are unique and not fungible with other crypto-assets, including digital art and collectibles, whose value is attributable to each crypto-asset’s unique characteristics and the utility it gives to the token holder."

But watch out for this if you are thinking of fractionalizing NFTs: "The fractional parts of an unique and non-fungible crypto-asset should not be considered unique and not fungible."

which suggests they are viewing fractionalizing NFTs as more like a securitization.

OK - some "inside baseball" on how EU legislation works. What I have been quoting from is the "Council agreed position" - the "Council" is the Council of Member States.

The Council is analogous to the Senate in the US in sense that it is composed of all the member states, each get equal vote. It is also different from the Senate because each country defines its position, rather than individual senators.

The other parties to this process are the European Parliament (like the House in the US - proportionate based on population) and the European Commission (executive branch). All three will need to agree to this.

This a called a "Trilogue" - like a dialogue but with three parties. This is expected to happen in the first part of 2022. Then once the text is agreed it needs to be formally adopted, then its various parts will take time to enter into force.

So far we just know this is the Council's position (the Council of Member States). And so far none of the other Triloguers has expressed public opposition.

This could also establish a model for other jurisdictions - the EU could take the lead here! WAGMI