🤔Everything you need to know about the crypto regulations

June 27, 2022

What up, family, 👨‍👩‍👧‍👦

Seedphrase Daily here 👋. The friend that wakes you up to start your week! We’re here to serve you Crypto and Web3 on a silver platter.

Today’s estimated research time is 5 hours and 14 minutes condensed into a read time of 3 minutes and 51 seconds. Stay tuned to where we talk about:

  • 🤔Everything you need to know about the EU regulations

  • 🔨YugaLabs taking legal action against FUD

  • 👨‍🏫Why regulations actually help us.

🤔Everything you need to know about the EU regulations

The two most important EU crypto regulations to date, MiCA ("PoW-ban") & TFR ("unhosted wallets"), are about to be finalized by the end of June.

They have enormous implications for the crypto market in the EU. At the same time, lawmakers are determined to stop scam artists and money launderers from abusing the unregulated industry, which has also attracted the attention of tax enforcers from Australia, Canada, the Netherlands, the U.K. and the U.S.

Let's go over the landmark MiCA bill:

The last & concluding political trialogue meeting between the three central EU institutions (Council/Parliament/Commission) will be next Thursday, June 30.

MiCA stands for Markets in Crypto-Assets.

Two main issues with the regulations:

  1. NFTs - The Commission wants to include them for consumer protection reasons.

  2. Stablecoins - main aspects are closed, such as no exemptions for algorithmic stablecoins and high regulatory requirements for issuers of both EMT (e-money-tokens)

NFTs

The crypto lobby fears that legislators are going too far to keep up with crypto technology. It says cramming NFTs into MiCA is a mistake because these assets aren't financial. They cater more to artists, musicians and gamers.

NFT enthusiasts are worried that these regulations could suffocate Europe's NFT market.

However, we need regulations to move forward toward mass adoption.

"Left unregulated, NFT markets will remain prone to severe market manipulation risks such as wash trading and insider trading," Commission officials outlined to legislators in the Council and Parliament in a personal note.

The EU regulations with NFTs will harm startups in Europe. With all the regulations, the European Union scares companies and users away. The 'unhosted wallets' will prevent users from using wallets such as Metamask even to purchase NFTs/Crypto.

The Council hasn't 100% made a decision yet, but if these regulations are imposed, we can expect a drastic effect on the EU market.

Stablecoins

Stablecoin issuers face a dilemma concerning EU stablecoin regulation (MiCA). Either they get authorized and risk seeing their issuance curbed or yield services on top of their stablecoin prohibited, or they don't and won't be admitted on EU trading platforms anymore.

MiCA was drafted as a direct reaction to the former Libra stablecoin project.

It sets two stablecoin categories

1. E-Money-Tokens (EMTs)-refer to one single Fiat currency

2. Asset-Referenced-Tokens (ARTs)-refer to >1 Fiat currency, 1 or more crypto assets, 1 or more commodities

Only a few stablecoins have been pegged to the Euro, such as tether's EURt and EURS which sit at a market cap of $218.4M and $130.1M.

Though the market is still in its infancy, the stablecoins pegged to the Euro have been gaining some traction. Regulators state, "stablecoins should not be regarded as a new class of safe asset but rather as a less volatile but risky crypto-asset".

So we can't ignore the rising demand for the second-largest currency's stablecoin, and these regulations might be the thing we need to get out of this bear market.

Even the United States wants to pass bills to regulate the cryptocurrency markets. President Biden signed off on new crypto legislation related to taxes in the $1.2 trillion bipartisan infrastructure bill late last year. And the Federal Reserve is toying with the idea of issuing a U.S. digital currency.

🔨YugaLabs taking legal action against FUD

The creators of the BAYC have announced a lawsuit against parties slandering the project. The team at Yuga Labs reiterated that they would 'continue exploring and pursuing all legal options at their disposal through the following Tweets.

Debunking the BAYC artwork:

Ryder Ripps alleged that BAYC NFT's artwork featured racist caricatures of black and Asian people and that the project's logo and branding had several nods to specific symbology and Nazi language.

Although the team did not address all of the points raised against BAYC, they categorically denied allegations that their logo was derived from the Nazi symbol Totenkopf (skull and crossbones). He also reiterated that using monkeys in the BAYC is a nod to crypto degeneracy and not a racist troll.

Did this have any effect on the project?

To our surprise, the project seems to be holding well, maintaining a consistent daily volume of 1250Ξ and a floor price of 91.5Ξ.

It's important to note the power of establishing yourself as a bluechip project. It's crazy to think BAYC got hit with such serious allegations but was barely affected. 99% of the time, if a project was "exposed" with a 1-hour long video, it would collapse. Look at Azuki when the founder got doxxed. Did you believe the conspiracies?

👨‍🏫Why regulations actually help us.

Regulations can be a "scary" thing, and no one likes when the government gets involved, especially regarding money. But they are a necessary factor when it comes to mass adoption. Right now, to the regular person, crypto looks like something that only criminals use for washing money and buying illegal products. With regulations, the idea is more open to the general public so they can explore the space.

83% of the people in Europe don't have cryptocurrency, and this is because of how unsafe it feels to them. With the Fed having access to identity verification, it no longer makes it "decentralized," but it will translate into fewer scam projects, equating to less fear in the market.

For example:

The United States had specific regulations in the stock market but allowed companies to grow significantly and create room for mass adoption. Robinhood is a brokerage company that contributed to retail trading and making it accessible to everyone. In 2016 it had 1 million users and now has 22.8 million users.

However, it can't be good until it gets terrible.

Regulations could prohibit current startups from growing to their full potential as it will affect the money they make. It will also affect volume in the short term by scaring off investors that think the news is bearish.

As nothing is final until we wait and see if this law is implemented on June 30, 2022, we will keep you guys updated with what's happening and how it will affect the markets. Stay strapped if you're bullish on Crypto and NTfs long-term technology because we're in for a ride.

Newseeds 🌱 :

That’s a wrap! Stay tuned if you want to know what happens with the regulations. Are you in crypto for the long run? Make sure to follow us on Instagram and Twitter for more up to date content! And check out our NEW YouTube video and subscribe because we are giving away 1Ξ once we hit 1000 subscribers.

See you tomorrow! ✌️ 💎

Meme of the Day

"NFTs are a scam"

Disclaimer

None of this is financial advice. This newsletter is strictly educational and is not investment advice or solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research!

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