France races the clock to finalize sweeping new EU crypto regulations by midnight tomorrow

Quick Take

  • The European Union is considering two landmark pieces of crypto regulation this week. 
  • France’s presidency over the European Council ends tomorrow night. It’s hoping to finalize these bills as part of the legacy of this term. 
  • If the EU doesn’t reach an agreement by the time Czechia assumes the presidency on July 1, these bills are likely to languish until September. 

The European Union is about to start what will be, if France gets its way, final debates on the Markets in Crypto Assets regulation.

The French presidency over the European Council — effectively, the union’s upper legislative body — ends tomorrow at midnight. The French leadership is hustling to beat out the clock to move MiCA forward and score a legislative win. 

The actual negotiations are ongoing and facts are developing as the deadline approaches.

MiCA has been in the works for years, but only passed the European Parliament in March. It has, in the interval, been in trilogue debates between the EU’s three governing bodies: European Parliament, Council and the Commission. 

Two sources close to the trilogues say that France is likely to seal the deal on the latest version of MiCA, which it plans to consider a major achievement within its presidency. 

Czechia will assume the presidency at the beginning of July, but much of the EU goes on vacation from mid-July through August. Consequently, a failure to reach a deal on MiCA tomorrow will likely push back any further negotiations to September. 

According to a note from the French Presidency of the Council seen by The Block, remaining issues to resolve include regulation of “crypto-asset service providers,” or CASPs. Of particular concern is whether the European Securities and Markets Authority (ESMA) will regulate them directly or whether that will fall to the markets regulators of individual countries. 

There are also efforts afoot to exempt non-fungible tokens from some or all requirements of other crypto markets, which would potentially save NFT issuers or platforms from having to register as CASPs. Debates tomorrow will touch on the specifics of those exemptions.

At the same time, the EU is considering the Transfer of Funds Regulation, or TFR, that similarly passed European Parliament in March. CoinDesk’s Jack Schickler reports that the EU reached an agreement on TFR late Wednesday evening. 

Broadly speaking, the European Council has tempered many of the aspects of the crypto regulations that the crypto industry found most bothersome. Moreover, the finalized version of MiCA and TFR will still require many months of tinkering before regulators will apply them.

Since the regulations left European Parliament, France has been more public in pushing to become a hub for blockchain. Just yesterday, French President Emmanuel Macron awarded two US regulators tightly associated  with cryptocurrency with the Chevalier in the French National Order of Merit award.

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