NFTs were added to Eu’s new digital asset and financial fraud regulations

On Monday, July 4, legislators in the European Union (EU) proceeded to push the point of digital asset regulations, with workers of the European Parliament suggesting new legislative changes to the Union’s anti-money embezzling laws that would put NFT transactions within the republic’s new AML/CFT structure.

The plan is part of a larger drive by Eu politicians to tighten and upgrade financial system safeguards, with an emphasis on countering financial fraud and terrorism funding.

The other week, EU parliamentarians achieved an agreement on the planned MiCA (Market in Crypto Assets) regulations, which would result in a new and complete regulatory system for digital assets inside the EU, with a special emphasis on business manipulation and abuse. The European Council released a draft policy statement the very same week on the EU’s soon-to-be-established Anti-Money Laundering Authority (AMLA), which may have direct power over high-risk digital asset providers and specified obligated companies.

The latest events in this rapidly growing industry have underscored the critical necessity for EU-wide legislation. That is what French Economy, Finance, Industrial, and Digital Sovereignty Minister Bruno Le Maire revealed.

He went on to say that MiCA will better safeguard Europeans who have ventured into such assets and avoid the exploitation of crypto-assets, all while remaining innovation-friendly in order to keep the EU appealing. This historic rule puts a stop to the cryptocurrency wild west and reaffirms the EU’s position as a standard-setter in digital matters.

Last week’s suggestions were noticeably devoid of NFTs. Nevertheless, on July 4, the EU released proposed changes to the new laws that would expand them to firms trading NFTs.

What is this notice about?

The NFT reform would particularly categorize digital asset providers who trade or act as a bridge for sale, purchase, minting, and import of distinctive and non-fungible crypto assets representing ownership of a different physical or digital asset as obliged entities subject to the recently founded AMLA and the arriving, new AML system. For instance, exchanges dealing in NFTs could be subjected to the same severe identification verification and activity reporting purposes as other obligated companies, like banks.

This decision will put an end to any relief NFT supporters may have had when NFTs were excluded from the proposals published last week.

In the previous 12 months, NFTs have erupted into the digital asset market, with the most costly NFTs first reselling for tens of millions of dollars. The enthusiasm surrounding such transactions has fueled a thriving second-hand market. NFTs can provide useful functionality, but such functionality adds nothing to their perceived market worth. As a consequence, many people believe that the NFT sector is highly susceptible to being used for financial fraud.

If the suggested NFT revisions are approved, they will indeed be referred to the European Council and European Parliament for ratification. However, no more progress is expected until the European Parliament returns from its summer holiday in August.