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EU starts working on regulating the DeFi sector in the Ethereum network
The European Commission has announced a tender for Eurozone regulators to explore ways to automate the collection of data on DeFi activity on the Ethereum network. The document says that the open source code of the second largest cryptocurrency’s decentralized finance (DeFi) projects and blockchain will «facilitate the identification of DeFi levers by supervisory authorities.» The pilot project will run for at least six months and is estimated to cost 250,000 euros (approximately $ 242,500), with applications accepted until December 1.
This could be quite impactful, as the ability of regulatory bodies to automatically monitor compliance by reading public blockchain data could drastically reduce the need for market participants (e.g. DAOs) to actively collect, verify & deliver data to authorities.
— Patrick Hansen (@paddi_hansen) October 10, 2022
«The ability of regulators to automatically monitor compliance with regulatory requirements by monitoring publicly available blockchain data can dramatically reduce the need for market participants to actively collect, verify and deliver data to authorities,» said Patrick Hansen, Head of EU Policy and Strategy.
As a reminder, the EU Economic and Monetary Affairs Committee today voted in favor of a new package of laws that will regulate the cryptocurrency industry (MiCA). 28 votes were cast in favor and only one against. The legislative text will now be submitted to the European Parliament. If the MiCA is approved, the law will be published in the Official Journal of the European Union in early 2023. The EU also supported the law on the identification of participants in cryptocurrency transactions, which will allow to effectively track and punish criminals who use the digital asset market for money laundering.