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According to a bill draft dated September 20, EU authorities have been urged to take a “substance over form” approach to the law, suggesting that NFTs such as BAYC’s Bored Apes and CrypoPunks could soon be recognized as securities under the MiCA regulation.
In late June, EU member states passed a provisional MiCA rulebook which discussed crypto assets providers (CASPs), stablecoins and wallets in scope, leaving out NFTs to give room for further consultations. The rulebook, which came on the heels of the TerraUSD (UST) crash, also introduced algorithmic stablecoins, requiring stablecoin issuers to build up sufficiently liquid reserves to ensure full user protection in case of insolvency.
In this week’s text, the EU is pushing for Algorithmic stablecoins to be regulated like other non-algorithmic stablecoins. According to the text, all stablecoins come under Mica regulations “irrespective of how the issuer intends to design the crypto asset, including the mechanism to maintain a stable value.”
“Offerers or persons seeking admission to trading of algorithmic crypto assets that do not aim at stabilizing the value of the crypto assets by referencing one or several assets should, in any event, comply with Title II of this Regulation,” the draft read.
 
 
The draft also seeks to have NFTs regulated as securities. Previously, rifts about how NFTs should be classified have arisen, with some factions arguing they can only be classified as assets and not securities due to their non-fungible nature. However, with the rise of fractionalization-where several copies of an original NFT are made to make it possible for several people to own a piece- regulators have been evaluating their resemblance to traditional securities.
According to the finalized text, “the issuance of crypto-assets as non-fungible tokens in a large series or collection should be considered as an indicator of their fungibility” implying that issuers of fractionalized NFTs could be liable under securities laws. This provision is seen as an attempt by EU authorities to end NFT issuers masquerading under the “non-fungible” veil to hide their financial operations.
That said, with the final draft text complete, the next steps will involve vetting of the text by lawyers, followed by a final vote by members before the MiCA regulation can enter into force. MiCA’s primary goals include harmonising the UE market, creating regulatory certainty, improving consumer protection and strengthening financial stability with regard to cryptocurrencies and other digital assets.
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