Seth Hertlein Profile picture
Jul 1 11 tweets 7 min read
1/ Today, the EU finalized #MiCA, a sweeping #crypto regulation that will profoundly impact Europe’s future competitiveness and the viability of its #Web3 industry. This was Europe’s chance to regain market share lost in Web2, but did the EU seize the opportunity?

🧵A thread…
2/ TLDR, no. MiCA doubles down on the failed notion of “leading in regulation” rather than prioritizing innovation. But, it could have been worse.
3/ In recent months, we at @Ledger spoke out about these proposals, even calling on you to get engaged against the worst ideas. We opposed the #Bitcoin ban that came just 4 votes from passing the EU Parliament. ledger.com/blog-stand-for…
4/ We had a lot to say about how the TFR would violate Europeans’ fundamental rights and proposed how the EU could achieve its goals without invading the #privacy of its citizens. ledger.com/blog-how-can-t…
5/ And we argued why it didn’t make sense to regulate digital art, music, and collectibles (#NFTs) like financial assets.
6/ So, how did it all shake out?
✅Reason prevailed on #NFTs! They are fully out-of-scope of MiCA unless they otherwise meet the definition of a financial instrument or fungible crypto-asset.
7/ ✅Similarly, #DeFi is mostly out-of-scope! MiCA was always better suited to centralized intermediaries, and throwing DeFi in would have caused more problems than it solved.
8/ ❌While Parliament failed to ban #PoW blockchains and assets directly, they snuck a potential backdoor ban into MiCA during the trilogues. Within 2 years, the Commission must report on “mandatory minimum sustainability standards for consensus mechanisms.”👀
9/ #Stablecoin regulation is particularly heavy and requires a physical presence in the EU. We won’t know what this means for decentralized stablecoins until we see the final text, but the % of current stablecoin circulation that complies with MiCA approaches zero.
10/ 👉While today's agreement is a big step, MiCA is not done. There will be level 2 legislation, review clauses and agency reports. Some have already called for "MiCA 2"🙄. @Ledger will keep fighting for common sense regulation that protects #freedom, #privacy and #security. END

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