New European Union rules could force issuers of non-fungible tokens (NFTs) to centralize and register in a move that insiders warn could “significantly broaden” planned EU crypto rules, according to a document.
The plans, now approaching finalization, could also toughen up the rules on overseas exchanges accessing the bloc and keep tighter tabs on the energy use of crypto mining, even if the risk of a bitcoin ban seems to have receded.
The document was prepared in France, whose government is responsible for chairing talks within the EU’s council. It is undated, but prepared ahead of a ‘closed-door’ meeting due to take place Friday morning Central European time. Governments and lawmakers need to thrash out their position before the rules, known as the Markets in Crypto Assets Regulation, or MiCA, can pass into law.
While governments want to see NFTs entirely excluded from the new law, the European Parliament is worried about their use in laundering schemes and wants tougher rules.
That would mean “a NFT issuer would have to be a legal person” rather than a decentralized entity and would also have to register with the authorities and comply with other consumer-protection measures set out in the law, the document stipulated.
“This would therefore significantly broaden the scope of the MiCA regulation” beyond its existing focus on cryptocurrencies and into NFT assets from the world of art, entertainment and gaming, the document said.
Lawmakers appear to have the support of the European Commission, which is responsible for brokering the remaining talks — and which also has concerns over the integrity of the NFT market, in which scams and frauds are becoming increasingly common.
The council also seems ready to concede to lawmakers’ tough position on limiting the energy emissions of crypto mining. The European Parliament no longer favours curbs on proof-of-work validation technology that some said could amount to a bitcoin ban — but wants to see new coins setting out their environmental impact in regulatory documentation.
The document said France “would suggest supporting” that call from the parliament, as long as it’s neutral in arbitrating between different technologies, such as proof-of-work. On Sunday, Mairead McGuinness, the EU’s financial-services commissioner, said a new global crypto agreement should consider environmental impacts.
Amid the decline of overall interest in the NFT, this law can mean the end of the NFT season in the EU.