Thread by @NYcryptolawyer

1/ A US take on this very informative thread from @paddi_hansen.

#MiCA unquestionably is the most important and comprehensive regulatory effort to date on #crypto and digital assets. However, this may not be a case of giving Europe a “first mover advantage”.

https://twitter.com/paddi_hansen/status/1542813914605297664

2/ You will likely see concerns raised about what MiCA does to Europe’s “competitiveness” in the emerging web3 space (whatever you think that term means).

Any time new regulations are put in place, the push-poll cries of market participants and regulators begin …

3/ Regulators:

4/ Market participants:

5/ Some (not all) of this is the kind of theater you see in almost any emerging sector of the economy. Both sides need to do what they do.

6/ What concerns me more is when there is a lack of understanding on the part of one side or the other.

In this case, the apparent lack of understanding on the part of the MiCA drafters goes to the heart of how this sector works - what “is” a protocol-based token?

7/ This point in @paddi_hansen’s thread goes to the heart of the matter:

https://twitter.com/paddi_hansen/status/1542813943248236544

8/ MiCA assumes that “utility tokens” will have an “issuer” and that the token “will provide digital access to a good or service, available on DLT” where the token is “only accepted by the issuer of the token”.

9/ This stems, I believe, from thinking of tokens as having “issuers” - a term generally used with respect to securities.

MiCA directly posits a legal relationship between the “issuer” of a token and some “good or service”it provides, as if the token was a supermarket coupon.

8/

9/ This goes to the heart of the matter. What most think of as “utility tokens” (ie, not stablecoins or ARTs) do not create any sort of legal relationship between the owner of that token and ANYONE else.

The legal entity that first sells a token can (and often does) dissolve.

10/ And (you know this was coming … !) this is one of the main reasons why these tokens are not “securities” and do not have “issuers”. They have “sellers”.

A regulatory scheme built upon an incorrect understanding is bound to result in undesirable outcomes.

11/ By way of contrast, the Lummis-Gillibrand #RFIA recognizes this critical distinction and provides a clear framework to distinguish tokens that create a legal entitlement (which are generally “securities”) and those that do not (generally “commodities”).

12/ We can and should commend Europe for taking on a project as widescreen as #MiCA. Much of the work done there is thoughtful and (hopefully!) workable (even if some of it’s choices are not ones I wouldn’t have made).

13/ But I believe that policymakers in the US can and will do better. There are learnings in MiCA we can draw from. There are also mistakes we can avoid making.

14/ I encourage the #crypto community to access @github and provide your take on what can be the global standard-setter for regulation in this space done right. @SenLummis @gillibrandny.

github.com/responsible-fi…

15/ Oh, and when commenting, please try and avoid using the kind of language you wouldn’t use in front of your Moms.

[end]

Sigh - No double negative intended …