A blockchain network for the EU
The EU needs its own blockchain for digital payments and smart contracts that will compete with existing networks such as Ethereum, says Belgian digital minister Mathieu Michel.
The bloc plans to introduce a landmark regulatory framework for cryptocurrencies and digital assets in April.
If the EU’s Markets in Crypto Assets (MiCA) legislation is accepted in next month’s vote, it will see the world’s first multinational regulatory framework for crypto and digital assets.
The block must now develop its own blockchain that will be able to register property ownership, driving licenses and professional qualifications, according to Michel.
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The scheme would bring blockchain use cases into Gov-tech, public services and supply-chain management for the first time.
Michel has named the conceptualized EU-wide blockchain, “Europeum”.
Michel told Coindesk that if MiCA is ratified, the EU needs “a blockchain network built around the fundamental values that underpin European society”.
He said: “Imagine that you have Europeum, a blockchain that contains a whole series of conditions to protect privacy and so on, which are very transparent.”
He added that the blockchain could focus on the digitization of administrative documents or on-chain storage
However, questions have arisen as to whether the EU would have enough qualified developers to build a robust enough blockchain to handle all the functions that the Belgian digital minister has conceptualized.
“At the moment there isn’t a huge horde of blockchain developers sitting out there waiting for something interesting to work on.
“In addition, the market price for such developers is actually quite high,” blockchain researcher Dr Keir Finlow-Bates told Yahoo Finance.
Bates, who is an EU-based blockchain consultant and founder of Chainfrog, pointed to the Bank of England’s recent job advertisement for a specialist to develop the UK’s Central Bank Digital Currency as an example of public initiatives being much less attractive to developers than private ones. sector options.
He said the job advert described “a ridiculous annual salary of £65,000, which wouldn’t get you anyone of any calibre”.
“You can imagine that if the EU were to build their own blockchain, they would be looking for a very specific set of developers, whose wages would be very expensive.
“But if they use a standard government tender system, they would end up bringing in a very undermatched set of contractors to develop the system for them, and there would be problems with this as it would result in an inadequate system.”
He said that building the EU’s blockchain on top of existing networks makes more sense, since that is where the experts are available and the systems have been tested.
Instead of inventing its own blockchain, “the EU can spike back on top of existing blockchains”, he added.
He added that any EU-developed blockchain would be a fairly centralized network, compared to existing ones like Ethereum or Cardano.
“Each country in the EU could run its own node, but I don’t think the bloc has the mindset to consider the idea of individual citizens participating in the maintenance of such a system.
“I can imagine that they will end up building a blockchain in a very bureaucratic way, which I think will have problems”, he added. About educational qualifications that can be recognized by all institutions across the block.
What is MiCA?
The EU is set to vote on the proposed Markets in Crypto Assets (MiCA) Act in April, which if ratified would create a common licensing regime for crypto wallets and exchanges operating in all 27 members of the bloc.
European lawmakers have already agreed on the law in principle, but the nearly 400-page text must be formally signed off by the lawmakers and national governments that make up the EU’s governing body.
Introduced by the European Commission in September 2020 as part of the wider Digital Finance Package, the planned legislation is intended to promote innovation, improve consumer protection and contribute to financial stability as the digital asset market expands.
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The key components of the planned MiCA regulation include:
Classification of crypto assets
MiCA establishes a clear definition and classification of different types of cryptoassets, such as utility tokens, asset-referenced tokens and e-money tokens.
This classification helps determine the appropriate regulatory treatment for each type of token.
Issuing and trading
The proposal lays down rules for the issuance and trading of crypto-assets. Issuers are required to publish a detailed whitepaper containing information about the project, the token and the risks involved.
They must also register with the relevant national authorities.
Licensing requirements
Crypto asset service providers (CASPs), such as wallet providers, exchanges and custodians, must obtain authorization from their respective national authorities to operate within the EU.
This ensures that these entities comply with EU-based anti-money laundering (AML) and counter-terrorist financing (CTF) rules, as well as other operational and organizational standards.
Market abuse and transparency
MiCA introduces rules to prevent market abuse and manipulation, such as insider trading and front-running.
It also imposes transparency and disclosure requirements for issuers and CASPs to instill trust and confidence in this burgeoning market.
Consumer and investor protection
The proposal introduces safeguards, such as a requirement for issuers to segregate customer funds, mandatory insurance or similar guarantees for CASPs, and clear communication of risks associated with crypto-assets.
Supervision and enforcement
MiCA establishes a harmonized approach to the monitoring and enforcement of crypto-asset markets across the EU. This includes cooperation between national authorities and the creation of a single rulebook to ensure consistency in the application of regulations.
Mathieu Michel did not immediately respond to a Yahoo Finance UK request for comment.
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