We discussed the latest developments in the legal regulation of cryptoassets in the EU and the Czech Republic.
On 15 February 2024, the Zenwork space in Prague’s ARA Palace on Perlová Street became a hub where expertise merged with technology and innovation. The event, titled “Blockchain in Business: Bridging the Gap” featured several speakers and invited guests who shared their insights during panel discussions on various topics throughout the afternoon.
Jan Šovar, attorney at FINREG PARTNERS, also contributed his expertise on the legal regulation of cryptoassets in the EU and the Czech Republic during the debate on “Blockchain Security and Compliance“.
MICA as a New Benchmark
The rise of cryptocurrency services and other virtual assets has prompted governments worldwide to seek ways to regulate these activities. However, the approach to regulating cryptocurrencies varies significantly across countries. It is often said that while the US excels in innovation, Asia is known for refining and adapting, and Europe excels in regulation—a reputation exemplified by the GDPR. The Markets in Crypto-Assets Regulation (MICA) has the potential to become a benchmark similar to the GDPR. The “Brussels effect” is likely to play a significant role here as well.
Web3 Environment and MICA
With the introduction of MICA, individual national authorisation regimes for the Web3 world will be unified under a single authorisation system applicable across all EU countries. This regulation will allow Web3 entrepreneurs to operate in a much larger European market under fewer licenses, streamlining their operations and expanding their reach.
AML, DeFi, and Asset Tokenisation
AML regulations apply to all virtual asset service providers, regardless of whether they operate within decentralised systems. However, regulating the DeFi environment remains a complex and unresolved issue. It is unclear on whom to impose regulatory obligations, and whether a new fictitious entity should be created (based on the “DAO” principle), connectivity providers should be regulated, or another solution should be adopted. In my opinion, EU regulatory attention will now focus more on the tokenisation of assets (not just purely virtual ones) rather than on DeFi.
Use-Case of Blockchain: The EBSI
One project worth highlighting is the use-case being developed within the European Blockchain Services Infrastructure (EBSI). This platform aims to enhance the capabilities of blockchain for public benefit. One of the current case studies involves using blockchain to authenticate documents, such as certificates of internships at European schools or diplomas. I am an advocate of the EBSI idea, and perhaps we will see a unified European document authentication service based on blockchain, which could be used in AML identification and verification.
We extend our gratitude to the organisers and all participants for a stimulating and inspiring conference.
