New German government cites crypto in coalition agreement
The new German government has cited crypto in its coalition agreement, advocating for an equal playing field between traditional finance and “innovative business models.”
Three German political parties agreed to a coalition deal this week that will see left-leaning Social Democrats (SDP), the Green Party and the right-friendly Free Democrats (FDP) take the reins from December this year.
According to a rough translation of the 177-page agreement published on Nov 24, the coalition calls for a new “dynamic in relation to the opportunities and risks from new financial innovations” such as crypto assets and blockchain businesses:
“We are making European financial market supervisory law fit for digitization and for complex group structures in order to ensure holistic and risk-adequate supervision of new business models.”“We need joint European supervision for the crypto sector. We oblige crypto asset service providers to consistently identify the beneficial owners,” the agreement adds.
The document states the EU supervisory authority should “not only take care of the traditional financial sector but also prevent the misuse of crypto values for money laundering and terrorist financing.”
The formation of the coalition reportedly took two months of negotiations following the German federal election on Sept. 26, and it marks the end of Angela Merkel's 16-year reign as Chancellor who is retiring and will be replaced by the SDP’s Olaf Scholz.
Crypto progressing across the EU
Elsewhere on the continent the European Council —which guides the EU's political agenda — adopted two proposals named the ‘Regulation on Markets in Crypto Assets (MiCA) framework and the ‘Digital Operational Resilience Act' (DORA).
MICA in particular — initially drafted by the European Commission in September 2020 — aims to create a “regulatory framework for the crypto-assets market that supports innovation and draws on the potential of crypto-assets.” While it still needs to be ratified by the European Parliament , if enacted, it will subject crypto assets issuers to more stringent requirements, but nonfungible tokens (NFTs) and utility tokens will fall outside the scope of th regulation.
Related: EU central banks working on DLT-based asset settlement
In a comprehensive post from user “BelgianPolitics” on the r/CryptoCurrency subReddit on Nov. 26 the progressive regulatory proposal was labeled as the “most important one to date for the entire crypto industry.”
The Redditor’s analysis has almost 900 comments at the time of writing and provides a detailed rundown of the proposed laws in MICA. The author emphasized the significance of the proposals:
“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,” BelgianPolitics said.