There’s never a dull moment on the blockchain. Here’s what you need to know this week:

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MICA DIFFERENCE

Europe passed the most comprehensive crypto rules in the world

After years of crypto-industry requests for regulatory clarity across the world mostly going unmet, the European Union answered the call last week and became the largest jurisdiction to approve comprehensive crypto rules by passing the Markets in Crypto Assets (MiCA) law. So, what’s in the law? And will the EU be able to position itself as an attractive web3 hub for companies currently based in countries with greater regulatory uncertainty? Let’s take a closer look.

What’s covered in MiCA?

MiCA’s goal is to bring regulatory clarity to the crypto industry. Here are its three most significant provisions:

Licensed exchanges: The law creates a universal license for the EU’s 27 member states that will be required for all “crypto asset service providers,” which includes exchanges, custodial wallet providers, and token issuers that operate in the EU. To qualify, companies must keep consumer and business funds separate, meet stringent capital minimums, and have effective anti-money laundering procedures in place. Meanwhile, asset issuers must publish whitepapers with project information, among other requirements.

Collateralized stablecoins: Under MiCA, stablecoin issuers, like Circle and Tether, will be required to maintain an adequate amount in reserves to meet redemption requests and prevent liquidity issues. Additionally, they will be required to publicly post the composition of their reserves on a monthly basis, and disclose any event that could have a significant impact on either the value of stablecoins or their reserves. 

Consumer protections: MiCA also carves out key protections for retail crypto investors, who have lost billions of dollars in funds in recent years due to hacks and misused funds. The new legislation states that companies with crypto asset service provider licenses could be held liable for lost consumer funds in the case of a cyberattack, theft, or any malfunctions. 

What is the industry saying about the law?

The crypto industry largely praised the EU for passing MiCA, noting that the EU’s regulatory approach embraces innovation and encourages the crypto industry to operate there. 

“Regulation by enforcement like in the U.S. is not a solution,” said Monty Metzger, founder of Liechtenstein-based exchange LCX, in support of MiCA. “We need rules and guidelines to let technology innovation happen.” 

Mark Jennings, the Head of European Operations at crypto exchange Kraken also lauded the law, calling it a “pragmatic blueprint for crypto assets.” And Coinbase Vice President of International Policy, Tom Duff Gordon called MiCA a “proactive step taken by the EU [that] proves their commitment to embracing technology that will update legacy systems and in doing so, allow for the creation of new opportunities.”

What comes next?

The new regulations won’t officially go into effect for at least 12 months, with some provisions opening an 18-month transition period to allow companies to comply. 

There will also be more rules coming. MiCA is defined as a “level one” law, but it will soon be followed by a “level two” text that will define exactly how to implement these rules. And key topics like NFTs, DeFi, and DAOs aren’t thoroughly covered by MiCA, meaning another major bill is likely on the horizon.

Why it matters… MiCA has made Europe instantly more attractive as a destination for crypto firms, and in recent months companies have already announced plans to establish headquarters there. Meanwhile, in the U.S., Coinbase filed a legal action against the Securities and Exchange Commission this week in an attempt to compel the regulator to engage on the question of providing regulatory clarity. Noting the differences between the EU and America, U.S. House Financial Services Committee Chair Patrick McHenry put things bluntly on Tuesday: “What they're showing is, with web3 they're ahead of the game of the United States.”

HOUSES FOR HODLERS

You can now buy a home with crypto (in Texas)

Buying a house is the biggest purchase most people make in their lifetime. And starting this month, you can make it with crypto.

MyEListing, a commercial real estate listings platform based in Texas, is billing itself as the first crypto real estate marketplace in the U.S. (Disclosure: MyEListing partners with Coinbase Commerce to execute payments). While only properties in Texas are currently eligible for listing, the company says it will expand to other “select states” in the coming months. 

Among the properties available for purchase with crypto on the platform: a lot in Grapevine, TX, available for $499,000, 18 BTC, or 275 ETH (as of Tuesday morning). 

One major benefit of purchasing a house with crypto, according to MyElisting: faster settlement times. (If you have ever experienced the joy/agony of buying a house, you know it's anything but fast and efficient.) Buyers can close within “one business day,” or roughly 50 times faster than current averages, the company says, and the program is open to buyers from around the world. 

“Real estate commerce needs to be changed,” said Caleb Richter, the CEO of MyEListing. “It's hard enough as it is to buy property in your local neighborhood, let alone in another state or country.”

NUMBERS TO KNOW

$100 million

The value of a FTX sponsorship deal that Taylor Swift turned down last spring after due diligence into the now-bankrupt exchange left her and her team skeptical about the deal. As a result, Swift dodged a high-profile, class-action lawsuit that has ensnared a number of other A-list celebrities.

572,000 ETH

The record-breaking inflow of staked ETH deposited into Ethereum over the last week, driven largely by institutional investors and ETH holders re-depositing staking rewards. The news defied some analyst concerns that the recent Shapella upgrade, which enabled unstaking, might lead to a flood of holders withdrawing staked funds.

82%

Percent decline in venture capital funding for crypto startups in Q1 2023 compared to Q1 2022, according to a Crunchbase report. The drop from $9.1 billion to $1.7 billion illustrates the shift from sizable pre-crypto winter funding rounds to companies now raising money at lower valuations, or doing “down rounds.” But there is still plenty of investment in the crypto industry. This week, Google announced a new program to help web3 developers fast track projects with technical and financial support.

AROUND COINBASE

Coinbase invites you to take a ‘Stand with Crypto’

As highlighted in the discussion above about MiCA, there is still a lot of work to be done to establish a clear and sensible crypto policy in the U.S. For those interested in showing support for this cause and becoming part of a growing community that believes in the future of crypto, you can now mint a free Stand with Crypto commemorative NFT. 

The NFT features a blue shield, representing a collective stand to protect and promote the potential of crypto. And any mint fees associated with the Stand With Crypto NFT collection will be donated to vetted organizations through a Crypto Advocacy Round with Gitcoin. (Note: This is a purely commemorative NFT with an open mint and has no intended utility or value.) Learn more here. 

And while you’re at it, also check out Coinbase’s #Crypto435 campaign to grow the crypto advocacy community and share tools and resources. 

DISCLAIMER

This material is the property of Coinbase, Inc., its parent and affiliates (“Coinbase”). The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Coinbase or its employees and summarizes information and articles with respect to cryptocurrencies or related topics that the author believes may be of interest.

TOKEN TRIVIA

Who created Dogecoin?

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