In September 2020, the European Commission promised an effective regulatory framework on the markets in crypto-assets, the famous MiCA Law; a single regulation for the 27 member states, which would be implemented within a four-year period.

An announcement this past July 1st stated that members of the European parliament seemed to have reached a provisional agreement on the regulation of this sector.

This regulation aims to replace the mosaic of national laws that regulate these assets and service providers in each of the states. It will be implemented later by the national authority of each country under the supervision of the ESMA (the European Securities and Markets Authority).

MiCA is primarily intended to regulate crypto-asset issuers and crypto-asset service providers (CASPs), such as exchanges.

For example, there will be a public register of crypto-asset service providers that do not comply with the regulations. MiCA requests stablecoin issuers to build up a sufficiently liquid reserve, with a 1/1 ratio and partly in the form of deposits.

The possibility of establishing a daily trading volume limit for stablecoins to control the risks of these transactions is being discussed.

However, it is likely that the European Commission will issue a report regarding DEFI during 2023, looking to establish common regulations and clearer standards to ensure that investors and consumers can better understand the risks of these projects which, in many cases, are private.

In any case, we will have to wait because MiCA is yet to be approved by the European Parliament's Committee on Economic and Monetary Affairs (ECON), so it will not be applicable until the first half of 2024 at the earliest.

Higher trust and security or greater control and restriction using the blockchain? We will have to wait for the final text.