New German government mentions crypto in the coalition agreement
Germany’s new government has cited cryptocurrencies in its coalition agreement, to advocate for equal yields between traditional finance and “innovative business models.”
A culmination of three German political parties has agreed upon a coalition deal that would see left-leaning Social Democrats (SDP), the right-friendly Free Democrats (FDP), and the Green Party take over starting December this year.
According to a rough translation of the agreement with 177 pages in total that was published on November 24, the coalition government has called for a new “dynamic” relating to the opportunities and risks from new financial innovations like blockchain business and crypto-assets.
The agreement pronounces that the government is making the European financial market a “supervisory law” that would be “fit for digitization and complex group structures” for ensuring holistic and risk-adequate supervision of emerging business models.
The agreement has added that the government needs joint European supervision for the crypto sector. They have obliged that crypto asset service providers must “consistently identify the beneficial owners.”
The document further states the EU supervisory authority must “take care of the traditional financial sector” and also help in the prevention of the misuse of crypto values in activities like money laundering and terrorist financing.
The formation of the coalition had taken two months of negotiations following the German federal election on September 26, hence marking the end of Angela Merkel’s 16-year tenure as Chancellor. Merkel is retiring to be replaced by the SDP’s Olaf Scholz.
The European Council has adopted two proposals named the ‘Regulation on Markets in Crypto Assets (MICA) framework and the ‘Digital Operational Resilience Act’ (DORA).
MICA, in particular, is aiming at creating a regulatory framework for the crypto assets market that would support innovation drawing on the potential of crypto assets. It was initially drafted in September 2020 by the European Commission. It is still awaiting ratification by the European Parliament, but if enacted, it would subject crypto assets issuers to more stringent requirements. In that case, NFTs and utility tokens would fall outside the scope of the regulation.
In a comprehensive Reddit post from user “BelgianPolitics” on the r/CryptoCurrency subReddit, appearing on November 26, the progressive regulatory proposal had been labelled as the “most important one to date for the entire crypto industry.”
The Redditor’s analysis received almost 900 comments while writing this news, while simultaneously providing a detailed rundown of the proposed laws in MICA.
The author has also emphasized the significance of the proposals saying that these rules would have to be followed by every entity that operates in the European Union.
However, owing to the ‘Brussels Effect,’ there are great chances that these rules would become international standards in the end. While everyone is focused on the United States and China, the EU is “casually leading the way,” posted BelgianPolitics.