The current government in Germany has talked about cryptocurrencies in its coalition agreement. The government has stated that there needs to be a level playing ground between traditional finance and “innovative business models.”
In a coalition agreement that was signed this week, the Social Democrats (SDP), the Green Party and the Free Democrats will be working together under the new government.
New government calls for new financial innovations
The publication issued on November 24 stated that the new government called for a “dynamic concerning the opportunities and risks from new financial innovations” financial environment. This ecosystem will include firms that operate in the crypto and blockchain sectors.
The coalition also stated that it would transform the European financial market into one that accommodates digitization and brings a “holistic”, and offer adequate supervision of innovative business models.
“We need joint European supervision for the crypto sector. We oblige crypto asset service providers to consistently identify the beneficial owners,” part of the publication read. However, the publication adds that while innovation should be supported, there should be a framework to prevent money laundering and terrorism financing.
Crypto framework in the EU
The European Council recently announced that it had approved two proposals dubbed the “Regulation on Markets in Crypto Assets” (MiCA) framework and the “Digital Operational Resilience Act.”
MiCA is a proposal that was created by the European Commission in September last year. The framework seeks to support innovations and create a strong regulatory framework for crypto assets.
The MiCA framework needs to be approved by the European parliament, and if it is approved, it will subject cryptocurrencies to strict requirements. However, this framework will not regulate non-fungible tokens and utility tokens.
The two frameworks have been endorsed by the crypto market. A post on Reddit stated that the regulatory proposal is one of the most important in the crypto sector.
“These rules will have to be followed by every entity operating in the European Union. However, because of the ‘Brussels Effect,” there is a very good chance these rules will become international standards in the end. While everyone is focused on the US and China, the EU is casually leading the way,” the post read.
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