The regularization of this sort of asset is continuing even as the bitcoin market remains volatile. Julius Bär sees this as a positive development, believing that the legislation fosters confidence and will lead to broader use of digital assets in the future, particularly among institutional investors.
The European Parliament and the Council of the European Union have struck an agreement on ground-breaking crypto-asset legislation. The goal of this law, which is shared by the Union’s 27 member states, is to regulate service providers, safeguard consumers, and restrict greenhouse gas emissions caused by cryptocurrency mining.
In response to the surge in Initial Coin Offerings, the idea was submitted in September 2020. (ICO). Following protracted deliberations, an agreement was reached last week that resulted in a legal framework targeted at reducing difficulties associated with illicit activities such as money laundering. To track assets and report questionable transactions to the regulator, cryptocurrency firms operating in the European Union will now be required to authenticate the identities of their consumers. For this reason, the European Securities and Markets Authority will keep a public registry.
“The legislation requires issuers of new digital assets to produce a prospectus or a “white paper” style document explaining all the technical information about the blockchain, the native token, and all other features linked to the project’s ecosystem. Furthermore, stablecoin issuers will be obliged to keep a specified reserve limit, comparable to that required of banks or other financial organizations “
Sipho Arntzen, Julius Bar’s research expert on the future generation, elaborates.
The analyst feels the focus on stablecoin issuers is opportune, considering the recent collapse of TerraUSD, which was destroyed in a matter of days worth $40 billion, in a letter to the market on Wednesday. “This trend strengthens our opinion that liberal nations with credible institutions are considerably more likely to implement constructive crypto regulation, as opposed to countries with weak institutions, weak currencies, and fundamentally high levels of inflation,” the analyst adds.