The Crypto Community Is Concerned About An EU Ban On NFTs. Insiders worry that new EU crypto laws could “substantially broaden” the scope of existing EU rules by requiring non-fungible token (NFT) issuers to combine and register their assets.
Even though there doesn’t seem to be much chance of banning bitcoin, the proposals, which are almost done, may tighten the rules on foreign exchanges coming into the EU. And keep a closer eye on how much energy is used by crypto mining. Businesses that deal with digital assets are worried that Brussels’ old bureaucracy will make it harder for them to come up with new ways to sell digital assets like artwork, music, memes, and even tweets.
EU parliamentarians are discussing how to regulate crypto assets and the companies dealing with them. This is part of a plan called MiCA, which would handle so-called NFTs or non-fungible tokens. The rules haven’t covered online collectibles until now. There’s nothing left.
The paper was made by France, which is in charge of running meetings of the EU council. It doesn’t have a date on it, but it was written in preparation for a private meeting that was set to happen early Friday morning in Europe. Before the Markets in Crypto Assets Regulation, or MiCA, can become law, governments and parliamentarians must resolve their disagreements.
If you’re a con artist or money launderer who uses an unregulated business that has become a popular way to buy and sell things like digital art, you’ll have a hard time getting away with the EU ban on NFTs. OpenSea is a well-known NFT marketplace in the United States. Several cases have been filed against it because of claims of stolen and copied digital art, and a former employee was just arrested in New York on insider trading charges.
NFTs come with challenges and risks.
Because tokens can’t be used to buy other tokens, digital creators are making a lot of money. Internet auctions are used daily to buy and sell a lot of works of art. A designer could make millions of dollars even just a few minutes after their NFT is sold in the digital domain. It is also clear that people on the digital market seem more excited about their transactions than those on the physical market.
Since the European Commission suggested MiCA almost two years ago to give investors the same protections as in the financial industry, keeping up with the fast growth of crypto markets has been challenging. So, politicians are acting because they are worried that NFTs might not be regulated in Europe, which would let crypto businesses use the sector to avoid MiCA. Legislators want to decide on the issue as soon as next week. They can’t do anything because they need to act now.
Even though NFTs may become more apparent in the future, they are still a legal and regulatory issue for now. Meeting some of these expectations and standards may be easier when new laws are passed. Most of the NFT cases we see now have to do with digital art, but this could change in the future. Nonfungible.com said more than $2 billion was spent on NFTs in the first quarter of 2021.
Like the US, the EU does not have specific anti-money-laundering rules for NFTs. The Markets in Cryptoassets Regulation of the European Commission was passed in 2021. In this group of digital financial services is a proposal for a law to regulate crypto assets. On the other hand, the crypto lobby thinks lawmakers in Brussels are trying too hard to keep up with crypto technology. It says it was a mistake to include assets that are not money in MiCA. Its main targets are artists, musicians, and video gamers.
They are worried that the EU will kill Europe’s new NFT business by imposing rules that aren’t right for the market and burying creative people in mountains of paperwork and consumer checks. NFT use cases are still in their early stages. One of the most talked-about things right now is art. Digital art is basically the same as art made on cave walls or a canvas. The vice president and global head of policy at Ledger, Seth Hertlein, said, “We don’t regulate art like stocks, and we shouldn’t regulate the sale of digital art like we make the sale of crypto assets.” Ledger lets people store crypto assets and NFTs that aren’t traded on exchanges in a digital wallet that looks like a USB.
So this leaves the question if EU put regulations instead EU Ban On NFTs, how will it work?
How do regulations work for NFTs?
NFT doesn’t have a legal meaning that is recognized. Several governments are using different methods to sort non-fungible tokens (NFT). Because of this, there needs to be a worldwide organization of non-fungible tokens to make laws and make the practice legal everywhere.
Since the NFT market is growing so quickly, there needs to be a governing body. In the last few years, the number of ways NFTs can be used has grown a lot. This requires a regulatory body that can deal with NFTs and is flexible enough to do so. In the same way that governments have not yet given clear advice on NFTs, they have not yet given clear advice on virtual currency. Because of this, some states in the United States have passed laws that limit what virtual currency businesses can do.
Another essential thing to think about is who owns any NFT. To buy an NFT from the market, you have to make sure that the seller actually has the NFT you want to buy. Some people pretend to be sellers but only have fakes with them. That NFT’s rights to its intellectual property are not part of this deal. As the memo suggested, governments might also be more aggressive when crypto sites outside of the EU try to sell to EU customers.
Even though foreign companies can still offer investment services like brokerage to any European, who goes to them and asks, these rules, called “reverse solicitation,” are hard to understand and are applied in a way that isn’t consistent.
A paper from the crypto industry says that too little regulation of reverse solicitation could make it harder to use the MiCA law and open the door to unfair competition. It suggests that governments look at their policies again to make sure there aren’t any gaps or things that don’t make sense.
So what do you think of EU Ban On NFTs? Will it affect you? Share your thoughts.
