The Path to Cryptocurrency Regulation in Europe

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Although it seems like a long time since this has taken place, it was the necessary stage and criteria for regulatory bodies to understand what cryptocurrencies were.

Whether you are attempting to figure out what are the next NCAAF odds or just drafting your next cryptocurrency strategy, learning about the potential path to regulations is always a plus. But, in the end, it is all about understanding where cryptocurrencies stand and the potential path to regulation, which is making huge strides in Europe.

Current View of Regulations

Aside from just understanding what they were, potential regulators also needed to understand how cryptocurrencies worked and what implications would be brought upon the market when used. In the end, if there is no understanding by regulators, there will be a lack of a concise framework for a body of regulations to be built.

The environment has changed a lot in just a few years. This is not simply because of how cryptocurrencies have built their path and defined their journey but also the level of interest it has raised in the vast public.

Nowadays, an increased number of investors have acquired cryptocurrencies. They also know what a wallet is and have heard about platforms to trade and buy. With the boom of NFTs and the metaverse, we are now seeing how people are gradually entering the sector.

The adoption of cryptocurrencies is not only a thing for entrepreneurs or users, but industry giants have also embraced this new concept. Moreover, they have done so not just to provide services but also to invest in them.

Regulations Necessary for Protection

To many investors, regulations are needed to build a solid body on which cryptocurrencies can stand. Without these laws and codes, there will not be much to invest in, and many will drift away to pursue other interests.

Undoubtedly, having a solid and legal basis encourages entrepreneurs to carry out their projects. However, in the end, before launching a company, they take stock and assess the challenges, the possible sanctions in non-compliance hypothetical cases, and the entire process to decide whether it is worth doing or not.

Without regulation, one does not know what one is facing, and everything is left in the air. In this sense, establishing clear rules makes it easier to undertake and innovate while reducing the odds of falling under uniform thinking.

Spain As a First Example

In Spain, the Fifth Directive was the first stone that defined what a custodian, a digital asset, and exchanges were. European regulations can be regulations or directives. These directives are transposed. In other words, they must be incorporated into a specific legal system.

The exchange of cryptocurrencies for hard currency is the sale through the delivery of euros or any foreign currency that is legal tender. On the other hand, the providers of custody services for electronic wallets are those entities or individuals that provide safekeeping and custody services for cryptocurrencies on behalf of their clients.

These can provide services to allow clients to hold on to their investments by either saving or transferring these assets. While this may sound specific, these are the solid stepping stones to having the world of cryptocurrencies soon under regulation.

First European Proposal

Aside from the Fifth Directive, other regulations have established a path by which cryptocurrency service providers can conduct their activities in a regulated manner and in a way that is closer to a regulatory mold.

First, there is the concept of MiCA (Markets in Crypto-Assets), a proposed regulation that has been long-awaited but has not yet been enforced. MiCA is made by and for cryptocurrency service providers.

It will provide a wide-sweeping direction for the cryptocurrency ecosystem as it pertains to finances and has already found approval from European leaders. Provided it stands up, it will be implemented in 2024.