Digital Economy

https://www.thehindu.com/sci-tech/technology/explained-what-is-the-eus-new-crypto-legislation/article66771289.ece

About the news:

• Recently, The European Parliament has approved the Markets in Crypto Assets (MiCA) regulations.
• These are the world’s first set of comprehensive rules to bring largely unregulated cryptocurrency markets under the ambit of regulation by government authorities.

Purpose of MiCA regulations:

• MiCA aims to protect investors and ensure financial stability while allowing innovation and fostering the attractiveness of the crypto-asset sector.
• The regulations will not only apply to traditional cryptocurrencies like Bitcoin and Ethereum but also to newer ones like stablecoins.
• However, it will not regulate digital assets that would qualify as transferable securities and function like shares or their equivalent and other crypto assets that already qualify as financial instruments under existing regulation.
• ⦁ It will also exclude non fungible tokens (NFTs).

Key provisions of MiCA regulations:

• The regulations will impose a number of requirements on crypto platforms, token issuers and traders around transparency, disclosure, authorization, and supervision of transactions, 
• The rules require every crypto asset service provider (CASPs) to get incorporated as a legal entity in the EU. They can get authorized in any one-member country and will be allowed to conduct their services across the 27 countries. 
• They will then be supervised by regulators like the European Banking Authority and European Securities and Markets Authority, who will ensure that the companies have the required risk management and corporate governance practices in place.
• The rules also address environmental concerns surrounding crypto, with firms forced to disclose their energy consumption as well as the impact of digital assets on the environment.

About the Crypto:

• A virtual currency secured by cryptography is a Cryptocurrency or Crypto. 
• Encryption techniques are used to secure the network.
• Blockchain is a system of taping data in a way that makes it difficult or impossible to change, hack, or cheat the system.
• In simple words blockchain is a simple decentralized digital public ledger (a book or other collection of accounts).
• It stores transaction record.
• Individual ownership records are stored in a computerized database and it is designed to work as a medium of exchange.
• They are immune against any interference and manipulation as they are not issued by the government agency of any country.
• Blockchain technology is used in cryptocurrencies work which is spread across many computers that manage and records transactions. 

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