<aside> 💡 EUCI's commitment to staying ahead of regulatory developments is unwavering. We have established a robust system for receiving timely updates on regulations that impact DeFi and Web3 technologies. Our dedicated team closely monitors legislative and regulatory changes at local, national, and international levels, ensuring we are always at the forefront of evolving compliance landscapes. This proactive approach enables us to respond swiftly and effectively to new regulations or proposed amendments. We engage in continuous dialogue with industry experts, legal professionals, and policymakers to understand the evolving regulatory landscape and provide valuable insights and feedback. Through this dynamic process, we ensure that EUCI remains a trusted and proactive resource, capable of adapting to regulatory shifts in real-time and advocating for balanced, innovation-friendly policies that benefit the DeFi and Web3 communities.

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2022

Pictured above: MiCA’s timeline, for your viewing pleasure (and convenience)

• On the policy front, we had an unprecedentedly active, hectic and eventful year. The stars of the first half of 2022 were MiCA & the TFR, keeping us busy with the likes of the proposed unhosted wallets ban and the wording around scoping in DeFi. Now that both regulations are finalised, our work on the ground (aka on an EU agency and member-state level) is only beginning with our involvement with level 2 (and 3) measures and member-state interpretation.
• Around that time, the other files from the AML package - the AMLR in particular - gained traction. It became where some co-legislators attempted to re-introduce some of their failed proposals in other regulations - particularly by re-introducing limitations for unhosted/self-hosted/anonymous wallets, but with a twist, also affecting privacy coins.

Apart from the all-encompassing crypto regulation and the AML rules, we were busy with other files that directly and indirectly affect the crypto space. To name a few, the Data Act (with its ill-thought smart contract "kill switch"), the kick-off of the DLT Pilot Regime, the crypto transactions reporting for taxation purposes in DAC8, as well as the new, software-focused version of the Product Liability Directive and the proposed Cyber Resilience Act.

Regulatory activity in the first quarter of 2023 (non-exhaustive list)

• MiCA and TFR: The European Parliament Plenary vote for MiCA and TFR took place on April 20th, paving the way for publication in the Official Journal of the EU, expected in June. The MiCA provisions concerning stablecoins are expected to apply 12 months after entry into force (mid-2024), while the general application date for both MiCA and TFR is 18 months after entry into force (end-2024/early 2025).
• AML Package and AML Regulation: The AML package is moving forward, with the upcoming AML Regulation explicitly targeting the crypto industry and its wallets. EU has made steps forward in its AML Package, with key provisions including customer identity verification, caps on cash and crypto-asset transactions, and extending AML rules to decentralised finance arrangements and non-fungible token platforms.
• A report on DeFi: The Bank of International Settlements issued a report on DeFi and attempted to define it and the Financial Stability Board (FSB) has also published a report on DeFi.
• Payment Services Directive (PSD2): The EC published a study on the Payment Services Directive (PSD2).
• Digital Euro project: The European Central Bank seeks industry feedback on the design and technical implementation of the Digital Euro project.
• DLT Pilot Regime: The DLT Pilot Regime is now applicable, providing a temporary and optional framework for MTFs and CSDs to develop trading and post-trading services for DLT financial instruments. The FATF has released updated guidance on beneficial ownership, and ESMA has issued final guidelines on standard forms, formats, and templates to use when applying for permission to operate under the DLT Pilot Regime.
• European Regulatory Sandbox: The European Commission (EC) launched its European Blockchain Regulatory Sandbox, which will run from 2023 to 2026 and support 20 projects per year on the European Blockchain Services Infrastructure (EBSI).
• Paper on laying down effective policies for crypto-assets: International Monetary Fund (IMF) released a paper on laying down effective policies for crypto-assets. Furthermore, IMF, FSB, and the Bank of International Standards (BIS) will produce a synthesis paper on a common international regulatory approach for treating crypto-assets by September 2023.
• EBA Consultation on AML/CFT Supervision: The European Banking Authority has launched a public consultation regarding its revised Guidelines on risk-based AML/CFT supervision, with a specific focus on extending these guidelines to authorities responsible for supervising CASPs.
• ECB Paper on EU's Strategic Autonomy Agenda: The European Central Bank has recently released a paper discussing the EU's strategic autonomy agenda, focusing on economic vulnerabilities and relevant policy factors.
• ACPR’s Stance on DeFi Regulation in the EU: The French Prudential Supervision and Resolution Authority (Autorité de contrôle prudentiel et de résolution) has released a report addressing the prospective regulatory approach to DeFi within the EU. The report seeks to impact ongoing debates and supplement the European Commission's assessment report on DeFi. We’re also working on an industry-backed response to it.
• Strengthening Supervision of CASPs: A Message from the ECB: A recent blog post by ECB Supervisory Board member Elizabeth McCaul highlights the importance of enhancing supervision and adopting a global strategy for regulating CASPs within the EU.