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The Council of the European Union, consisting of the EU’s 27 heads of state, has adopted a position on the Markets in Crypto Assets (MiCA) regulation and the Digital Operational Resilience Act (DORA) in preparation for negotiations with the European Commission and Parliament.
The EU’s Digital Finance Package has come one step closer to legislation this week, as the EU’s finance ministers agree on a position on both MiCA and DORA.
“Digital finance is an increasingly important part of Europe’s economic landscape,” said Andrej Šircelj, minister of finance for Slovenia, who currently holds the presidency of the EU — a position that come the New Year, France will take over.
It is essential to create a stimulating environment for innovative businesses while mitigating the risks for investors and consumers, Šircelj continued.
“Today’s agreement strikes the right balance between the latter. Both files are a priority for the presidency and we now hope for a quick agreement with the European Parliament on these proposals.”
The European Commission first came forward with the Digital Finance Package on September 24, 2020.
The purpose of MiCA is to create a regulatory framework for the crypto-assets market that supports innovation and draws on the potential of crypto-assets in a way that preserves financial stability, as well as protecting consumers.
At the time it was proposed, Diem, the Facebook-backed stablecoin, was still Libra and trying to get a banking licence in Switzerland.
The stablecoin was a matter of concern for parliamentarians, as well as the EU’s finance ministers, who both were united in wanting a strong framework to maintain control over the bigtech’s venture into monetary affairs.
However, the crypto industry has since warned that it needs to adjust its focus, with one source criticising the commission’s proposal as a knee-jerk reaction to Facebook.
Although EU parliamentarians have called for the MiCA regulation to be even tougher than originally proposed, they have also expressed concern about the operational resilience compliance requirements being burdensome for financial institutions.
At a meeting in April, parliamentarians from various parties emphasised the need for DORA to be more proportional once the final text passes into law, stressing that it is important a balance is found between technological neutrality, harmonisation and proportionality.
As it stands, DORA aims to create a regulatory framework on digital operational resilience. This would compel firms to ensure that they can withstand all types of ICT-related disruptions and threats, to prevent and mitigate cyber threats.
Not over yet
EU legislation, not often praised for its quick delivery, is achieved through negotiations called the "trilogue". This involves the European Parliament, the European Council and the European Commission, with the latter acting as a mediator between the two co-legislators.
Now that the Council has established a negotiating position, it will enter into talks with the European Parliament on the proposals.
Once a provisional political agreement is found between their negotiators, both institutions will formally adopt the regulations.
