The European Union (EU) is set to agree on groundbreaking rules for regulating crypto assets on Thursday as the defeat in bitcoin pressures authorities to rein in the sector.
Globally, crypto assets are largely unregulated, with national operators in the EU only needing to show checks to fight money laundering.
A deal would give the EU a leg up on the global regulatory package by giving crypto-asset issuers and providers of related services a “passport” to serve customers across the EU from a single base, while meeting additional capital and consumer protection rules.
Industry officials say clarity on rules and passports could attract crypto firms from rival London. The United States and Britain, two crypto centers, have yet to approve similar rules.
Representatives of the European Parliament and EU countries are meeting to strike a deal on the crypto asset markets (MiCA), which would come into effect around the end of 2023.
A source involved in the talks said there were still three issues: non-fungible tokens (NFT), surveillance and energy consumption.
A deal is likely to focus on including only token-like NFTs in the scope of MiCA, with authorization and oversight of crypto firms at the member state level. The European Commission would assess the energy footprint of crypto assets, the source said.
Companies operating in an EU state would have 18 months from the start date to obtain a MiCA license without service interruption.
Crypto assets came under pressure following the collapse of TerraUSD and luna tokens last month, with major US cryptocurrency lending firm Celsius Network freezing withdrawals and transfers this month.
Bitcoin plunged to around $17,600 this month and is currently trading around $20,100, well below its late March level of $48,200, causing investors losses.