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MiCA Vote Postponed to April
What happened?
The European Union (EU) has again delayed the vote on the Markets in Crypto Assets (MiCA) regulation until April to translate the lengthy text into 24 official EU languages. However, the principles of the text are finalized and are not subject to change.
As a refresher: the law intends to regulate crypto-asset service providers (CASPs) and establish a uniform EU legal framework for digital asset issuance and custodial businesses.
The European Parliament Committee on Economic and Monetary Affairs approved MiCA in a 28-1 vote back in October that propelled it to its final vote that was then delayed due to its complex text in November.
What does this mean?
Although MiCA does not directly regulate DeFi and simply calls for the assessment of the sector, it is the most comprehensive crypto regulatory framework developed to date. The rules that apply to centralized issuers and exchanges will undoubtedly influence other jurisdictions’ policy approaches to crypto.
Finland Minister Calls for DAO Framework
What happened?
Earlier this week at the World Economic Forum meeting in Davos, Finish Minister Timo Harakka called on EU lawmakers to begin addressing the legal gaps and questions surrounding DAOs and smart contract protocols.
The Minister emphasized the importance of spearheading this endeavor to ensure that laws are both consistent and thoughtful across the member nations, and for Europe to capture the value and talent of the ecosystem.
Minister Harakka ultimately advocated for a multinational approach like the one taken with MiCA to prevent “harmful regulatory competition” among the EU’s 27 member nations.
What does this mean?
The EU continues their thoughtful approach to regulating the crypto ecosystem. With MiCA’s regulation of CeFi entities at the brink of adoption, EU legislators now take it upon themselves to address the regulatory issues that exist at the protocol level.
As things stand, it is unclear what legal entity DAOs fall under, and most importantly, who is liable in the event that a DAO is sued, which has led developers and users to proceed with a great deal of caution.
World Economic Forum DAO Report
What happened?
Earlier this week, the World Economic Forum (WEF) published the “Decentralized Autonomous Organization Toolkit.” The Report is meant to provide legislators with a general understanding of DAOs and the legal questions surrounding their proliferation. It is broken down into five sections: (1) What are DAOs?; (2) DAO Operations; (3) DAO Governance; (4) Legal Structures; and (5) Policy Recommendations.
Rather than gearing their recommendations to policymakers and proposing a framework, the Report is directed at DAO developers: “The needs of a DAO depend on its purpose, community, and composition; it is thus difficult to recommend strategies for DAOs generally… Rather than provide an exhaustive set of recommendations, this Report offers a starting point for DAOs to develop effective operational, governance, and legal strategies.”
What does this mean?
It is encouraging that WEF recognizes the difficulties associated with one-size-fits-all approaches to regulating these complex entities. We will continue to encourage other jurisdictions and regulatory bodies to take a standards-based approach similar to the one recommended in this Report.