NFT Collections Will Be Regulated Like Cryptocurrencies Under EU’s MiCA Law

August 15, 2022

By Sharan Kaur Phillora

Non-fungible tokens (NFTs) that are part of a collection will have to apply new European Union crypto rules intended to warn investors of risks; an official told attendees at Korea Blockchain Week on Tuesday.

Here’s what we know:

The remarks come despite previous claims that the innovative ownership tokens would be excluded from the bloc’s newly agreed Markets in Crypto Assets (MiCA) law. The EU struck a political deal on MiCA at the end of June – and how to treat NFTs, which offer a tradable, digital way to prove ownership of assets such as artworks, was a central sticking point in talks until the last moment.

EU hopes to “protect investors and preserve financial stability while allowing innovation and fostering the attractiveness of the crypto-asset sector,” according to a press release.

With this new classification, EU citizens hoping to put an NFT collection up for sale will fall under the umbrella of crypto-asset service providers (CASPs). They will need to receive express authorization from the EU before offering their services (or wares) to the public.

EU legislators “take a very narrow view of what is an NFT,” said Kerstens – an adviser for technological innovation at the commission’s financial-services arm – implying few assets will benefit from the exemption.

The European Commission, broadly the EU’s executive arm, proposed the first draft of MiCA in 2020. Since then, it has brokered talks in the EU’s Council and Parliament as they amended the law.

Korean regulators are still hesitating over how to regulate the crypto-asset industry. The approach taken by the EU – and by the U.S., whose Congress currently has a number of crypto bills pending – may prove crucial in setting their direction.

About the author

Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.