Draft EU law or treat NFTs as securities regulation? Influence geometry?

The latest news from foreign media points out that the landmark and now-finalized draft legislation on the market for encrypted assets (MiCA) in the European Union claims that NFTs sold as components of large collectibles have little or no clearly unique qualities or utility, and will therefore be subject to Same regulatory scrutiny as cryptocurrencies. 

According to University of Kentucky law professor Brian Fyre, the wording of the legislation is equivalent to the EU marking major blue-chip NFT collectibles such as Bored Ape Yacht Club (BAYC), Cryptopunks and Doodles as securities. If the EU starts to classify blue-chip NFT collections as securities, Fyre believes the impact on U.S. regulators will be inevitable. 

Because the question of which components of the crypto industry should be considered securities by government regulators has long been a hot issue, which has escalated recently. Earlier this week, the U.S. Securities and Exchange Commission hinted in a federal lawsuit filing that the entire ethereum network should be considered a stock exchange under U.S. oversight. 

The MiCA — the EU’s answer to a comprehensive crypto regulatory framework — has been anticipated for years and is expected to come into force in 2024. On September 21, the European Union has finalized the full text of the Encrypted Assets Markets Legislation (MiCA). It is expected to be the final version of the legislation. While officially the text is still open for comment, sources with knowledge of the negotiations say it has actually been finalized. A verified leaked version of the draft bill urges EU law enforcement officials to take a “substance-over-form” approach to the bill, meaning the bill’s provisions may even apply to some assets classified as NFTs.

MiCA is an agreement between the European Commission, EU lawmakers and member states on the latest crypto regulation. The regulation, called “Markets in Crypto-Assets” (MiCA), is the first attempt to create a comprehensive regulatory framework for digital assets in the region. EU lawmaker Stefan Berger said the rules would “rectify the wild west of crypto assets.”

The agreement is the first time the EU will bring cryptoassets, cryptoasset issuers and cryptoasset service providers into a regulatory framework, allowing innovation while protecting investors and maintaining financial stability. Bruno Le Maire, French Minister of Economy, Finance, Industry and Digital Sovereignty, said that the latest developments in this rapidly growing industry (cryptocurrency) confirm the need for EU-wide (unified) regulation. MiCA will better protect the citizens who invest in these assets and prevent the misuse of crypto assets, while facilitating healthier innovation. This landmark regulation will end the Wild West era of cryptocurrencies and establish the EU as the standard-setter for digital assets.

Earlier, MiCA made no mention of NFTs, excluding NFTs in principle from the framework, which more requires crypto asset issuers to publish white papers containing technical roadmaps for platforms to register with the authorities, and stablecoin issuers Hold capital and manage it prudently. 

But the latest revision includes a mention of fragmented NFTs. The bill states that “crypto assets shall be issued as non-fungible tokens in large series or collections as an indicator of their fungibility.” 

According to Fyre, the language directly attacks major NFT collections like the Bored Ape Yacht Club, which consist of 10,000 NFTs that are visually similar but differentiated by a numbering mechanism (e.g., Bored Ape #6443), according to These mechanisms are said to give each NFT holder complete stifling intellectual property rights.

“What they mean is that when you sell a 10,000 NFT collectible, you’re really selling a stake in the entire project,” Fyre said. “In other words, each NFT is functionally just a fungible share of the value of the entire project.” Essentially, in Fyre’s explanation, MiCA’s language asserts that, in the eyes of the EU, each Bored Ape NFT holder is Does not own a unique piece of art. While this distinction may seem semantic, if enacted as law and interpreted as such, it could have huge implications. It will effectively treat and regulate popular NFT collectibles such as BAYC, CryptoPunks, and Doodles as securities. 

As the first attempt by the EU to create comprehensive regulation for digital assets, MiCA will also have an impact on the regulation of other countries around the world.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/draft-eu-law-or-treat-nfts-as-securities-regulation-influence-geometry/
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