European Union wants to implement laws to regulate NFTs

In the case that the document was approved the Parliament could operate on a model similar to traditional banking

Thursday, May 05 CoinDesk made a report explaining that lawmakers in France have submitted a document to the European Union that proposes to impose some stricter regulations for the trading of Non Fungible Tokens (NFTs).

The legislative proposal is part of the measures suggested in the MiCA (markets in crypto-assets), which is how the draft European regulation concerning crypto-asset markets is known.

How the proposed law works

In this proposed law is suggested that the directive in charge of issuing further guidelines regarding crypto-assets would be ESMA (European Securities and Markets Authority). ESMA’s main function would be to create measures to resolve legal uncertainty and «ensure a level playing field between market operators’. 

With this, the European Parliament could operate on a model as similar as possible to that of traditional banking, by having the ability to grant or revoke a license in case of fraud or illegal activities.

The main objective stated is to ensure that the Union embraces the digital revolution and «to ensure that the EU regulatory framework is innovation-friendly and does not pose obstacles to the implementation of new technologies.»

The plans, which are now nearing completion, could also tighten rules on offshore exchanges accessing the bloc, and ensure strict controls on the energy expenditure involved in mining and certain blockchains.

Regulations could affect digital assets

Most governments, with few exceptions, are not yet interested in regulating NFTs. However, the European Parliament seems concerned about their recent use in laundering schemes, which is why it proposed creating stricter regulations today.

CoinDesk said that this new document was prepared for a meeting that took place in the morning hours and suggested that issuers of NFTs should be legal entities rather than decentralized entities, as well as that issuers would have to register with authorities and comply with other consumer protection measures. 

As for decentralized finance (DeFi), the Parliament had proposed to include decentralized autonomous organizations (DAOs) within the scope of the law, however it is unclear which entity could be responsible for talking to regulators.

EU lawmakers have so far expressed a softer approach, preferring to wait for future reports on the development of Web 3 in a year or two before taking steps to regulate cryptoasset trading.