In Its Coalition Accord, The New German Administration Addresses Crypto
According to the coalition accord, the new German administration supports the use of cryptocurrency and the creation of a level playing field between conventional banking and “creative business models.”
On Tuesday of this week, three German political parties reached an agreement to form a coalition government. The Social Democrats (SDP), the Free Democrats (FDP), and the Green Party will form the government from December of this year.
It is said in an interpretation of the 177-page accord, which was published on Nov. 24, that the alliance demands a new “interplay regarding the potential and threats from new financial advancements” such as cryptocurrency assets and blockchain enterprises:
According to the accord, they are adapting European financial sector regulatory rules to account for digitalization as well as complicated group formations to enable comprehensive and risk-adequate oversight of new business models in the European Union.
They also require a coordinated European approach to crypto-currency regulation. Furthermore, they require crypto asset providers to verify the legitimate owners consistently.
Per the document, a European Union regulatory organization should not only look after the conventional banking sector but also prohibit the exploitation of crypto assets for money smuggling and terrorist funding.
After the German federal election on September 26, the establishment of the coalition was said to have taken two months of discussions. It also signals the end of Angela Merkel’s 16-year tenure as Chancellor, who will be succeeded by Olaf Scholz of the Social Democratic Party (SPD).
Cryptocurrency Is Gaining Traction Within The EU
Another development took place elsewhere on the continent when the European Council — which controls the EU’s political agenda — approved two measures known as the “Regulation on Markets in Crypto Assets (MiCA) framework” and the “Digital Operational Resilience Act (DORA),” respectively.
MICA, in particular, was originally drafted by the European Commission in September 2020 to create a regulatory guideline for the cryptocurrency industry that promotes innovation and pulls on the prospects of crypto-assets.
If passed by the European Parliament, it would subject crypto asset providers to more strict standards. However, non fungible tokens (NFTs) and utility coins will be excluded from the scope of the legislation. The legislation is still subject to ratification by the European Parliament.
EU Leading The Way
In a lengthy post on the r/CryptoCurrency subReddit on Nov. 26, user “BelgianPolitics” referred to the progressive regulation plan as the “most essential one to date for the whole cryptocurrency sector.”
At the time of this writing, the Redditor’s study has received almost 900 responses, and it gives a thorough breakdown of the proposed legislation in MICA.
The author emphasized the relevance of the suggestions by saying that these regulations will have to be implemented by any organization functioning in the European Union.
However, as a result of the “Brussels Effect,” there is also a very significant likelihood that these norms will eventually become internationally recognized standards. “While everyone’s attention is focused on the United States and China, the European Union is unintentionally leading the charge,” BelgianPolitics said.
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