COUNCIL OF THE EUROPEAN UNION update

The EU brings crypto-assets, crypto-assets issuers and crypto-asset service providers under a regulatory framework for the first time. The Council pr… Press material Thursday 30 June 2022   ● Council of the EU   30/06/2022 22:37 | Press release | Digital finance: agreement reached on European crypto-assets regulation (MiCA)   The EU brings crypto-assets, crypto-assets issuers and crypto-asset service providers under a regulatory framework for the first time. The Council presidency and the European Parliament reached a provisional agreement on the markets in crypto-assets (MiCA) proposal which covers issuers of unbacked crypto-assets, and so-called “stablecoins”, as well as the trading venues and the wallets where crypto-assets are held. This regulatory framework will protect investors and preserve financial stability, while allowing innovation and fostering the attractiveness of the crypto-asset sector. This will bring more clarity in the European Union, as some member states already have national legislation for crypto-assets, but so far there had been no specific regulatory framework at EU level. "Recent developments on this quickly evolving sector have confirmed the urgent need for an EU-wide regulation. MiCA will better protect Europeans who have invested in these assets, and prevent the misuse of crypto-assets, while being innovation-friendly to maintain the EU’s attractiveness. This landmark regulation will put an end to the crypto wild west and confirms the EU’s role as a standard-setter for digital topics." Bruno Le Maire, French Minister for the Economy, Finance and Industrial and Digital Sovereignty Regulating the risks related to crypto-assets MiCA will protect consumers against some of the risks associated with the investment in crypto-assets, and help them avoid fraudulent schemes. Currently, consumers have very limited rights to protection or redress, especially if the transactions take place outside the EU. With the new rules, crypto-asset service providers will have to respect strong requirements to protect consumers wallets and become liable in case they lose investors’ crypto-assets. MiCA will also cover any type of market abuse related to any type of transaction or service, notably for market manipulation and insider dealing. Actors in the crypto-assets market will be required to declare information on their environmental and climate footprint. The European Securities and Markets Authority (ESMA) will develop draft regulatory technical standards on the content, methodologies and presentation of information related to principal adverse environmental and climate-related impact. Within two years, the European Commission will have to provide a report on the environmental impact of crypto-assets and the introduction of mandatory minimum sustainability standards for consensus mechanisms, including the proof-of-work. To avoid any overlaps with updated legislation on anti-money laundering (AML), which will now also cover crypto-assets, MiCA does not duplicate the anti-money laundering provisions as set out in the newly updated transfer of funds rules agreed on 29 June. However, MiCA requires that the European Banking Authority (EBA) will be tasked with maintaining a public register of non-compliant crypto-asset service providers. Crypto-asset service providers, whose parent company is located in countries listed on the EU list of third countries considered at high risk for anti-money laundering activities, as well as on the EU list of non-cooperative jurisdictions for tax purposes, will be required to implement enhanced checks in line with the EU AML framework. Tougher requirements may also be applied to shareholders and to the management of the CASPs), notably with regard to their localisation. A strong framework applicable to so-called “stablecoins” to protect consumers Recent events on the so-called “stablecoins” markets showed once again the risks incurred by holders in the absence of regulation, as well as the impacts it has on other crypto-assets. In fact, MiCA will protect consumers by requesting stablecoins issuers to build up a sufficiently liquid reserve, with a 1/1 ratio and partly in the form of deposits. Every so-called “stablecoin” holder will be offered a claim at any time and free of charge by the issuer, and the rules governing the operation of the reserve will also provide for an adequate minimum liquidity. Furthermore, all so-called “stablecoins” will be supervised by the European Banking Authority (EBA), with a presence of the issuer in the EU being a precondition for any issuance. The development of asset-referenced tokens (ARTs) based on a non-European currency, as a widely used means of payment, will be constrained to preserve our monetary sovereignty. Issuers of ARTs will need to have a registered office in the EU to ensure the proper supervision and monitoring of offers to the public of asset-referenced tokens. This framework will provide the expected legal certainty and allow innovation to flourish in the European Union. EU-wide rules for crypto-asset service providers and different crypto assets Under the provisional agreement reached today, crypto-asset service providers (CASPs) will need an authorisation in order to operate within the EU. National authorities will be required to issue authorisations within a timeframe of three months. Regarding the largest CASPs, national authorities will transmit relevant information regularly to the European Securities and Markets Authority (ESMA). Non-fungible tokens (NFTs), i. e. digital assets representing real objects like art, music and videos, will be excluded from the scope except if they fall under existing crypto-asset categories. Within 18 months the European Commission will be tasked to prepare a comprehensive assessment and, if deemed necessary, a specific, proportionate and horizontal legislative proposal to create a regime for NFTs and address the emerging risks of such new market. Next steps The provisional agreement is subject to approval by the Council and the European Parliament before going through the formal adoption procedure. Background The European Commission came forward with the MiCA proposal on 24 September 2020. It is part of the larger digital finance package, which aims to develop a European approach that fosters technological development and ensures financial stability and consumer protection. In addition to the MiCA proposal, the package contains a digital finance strategy, a Digital Operational Resilience Act (DORA) – that will cover CASPs as well - and a proposal on distributed ledger technology (DLT) pilot regime for wholesale uses. This package bridges a gap in existing EU legislation by ensuring that the current legal framework does not pose obstacles to the use of new digital financial instruments and, at the same time, ensures that such new technologies and products fall within the scope of financial regulation and operational risk management arrangements of firms active in the EU. Thus, the package aims to support innovation and the uptake of new financial technologies while providing for an appropriate level of consumer and investor protection. The Council adopted its negotiating mandate on MiCA on 24 November 2021. Trilogues between the co-legislators started on 31 March 2022 and ended in the provisional agreement reached today. Anti-money laundering: Provisional agreement reached on transparency of crypto asset transfers (press release, 29 June 2022) Digital finance package: Council reaches agreement on MiCA and DORA (press release, 24 November 2021) Commission proposal for a Regulation on Markets in Crypto-assets Digital finance (background information) The Council and the European Parliament today reached a provisional political agreement on the regulation on foreign subsidies distorting the interna… View in browser Press material Thursday 30 June 2022   ● Council of the EU   30/06/2022 21:44 | Press release | Foreign subsidies distorting the internal market: provisional political agreement between the Council and the European Parliament   The Council and the European Parliament today reached a provisional political agreement on the regulation on foreign subsidies distorting the internal market. "The French Presidency of the Council of the European Union was built on the principle of economic sovereignty. Economic sovereignty depends on two key principles: investment and protection. The agreement reached on this new instrument will make it possible to combat unfair competition from countries that grant massive subsidies to their industry. This is a major step towards protecting our economic interests." Bruno Le Maire, French Minister for the Economy, Finance and Industrial and Digital Sovereignty The regulation aims to remedy the distortions created by subsidies granted by non-EU countries to companies operating in the EU’s single market. It establishes a comprehensive framework for the Commission to examine any economic activity benefiting from a subsidy granted by a non-EU country on the internal market. In doing so, the regulation aims to restore fair competition between all undertakings — both European and non-European — operating in the internal market.

Press material Wednesday 29 June 2022

● Council of the EU   29/06/2022 23:09 | Press release | Anti-money laundering: Provisional agreement reached on transparency of crypto asset transfers   The EU is making it more difficult for criminals to misuse crypto currencies for criminal purposes. Negotiators from the Council presidency and the European Parliament have reached a provisional agreement on the proposal updating the rules on information accompanying the transfers of funds by extending the scope of those rules to transfers of crypto assets. The introduction of this “travel rule” will ensure financial transparency on exchanges in crypto-assets and will provide the EU with a solid and proportional framework that complies with the most demanding international standards on the exchange of crypto-assets, in particular recommendations 15 and 16 of the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog. This is especially timely in the current geopolitical context. The aim of this recast is to introduce an obligation for crypto asset service providers to collect and make accessible certain information about the originator and the beneficiary of the transfers of crypto assets they operate. This is what payment service providers currently do for wire transfers. This will ensure traceability of crypto-asset transfers in order to be able to better identify possible suspicious transactions and block them. The new agreement will enable the EU to deal with the risks of money laundering and terrorist financing linked to these new technologies, while reconciling competitiveness, consumer and investor protection, and the protection of the financial integrity of the internal market. In particular, the new agreement requires that the full set of originator information travel with the crypto-asset transfer, regardless of the amount of crypto assets being transacted. There will be specific requirements for crypto-asset transfers between crypto-asset service providers and un-hosted wallets. Regarding data protection, the co-legislators agreed that the general data protection regulation (GDPR) remains applicable to transfers of funds, and that no separate data protection rules will be set up. The improved traceability of transfers of crypto assets will also make it more difficult for persons and entities which are subject to restrictive measures to try to circumvent them. In addition, crypto-asset service providers will have to implement appropriate internal policies, procedures and controls to mitigate the risks of evasion of national and Union restrictive measures. More generally, the entirety of sanctions already applies to all natural and legal persons, including those operating in the crypto currencies sector. In due course, member states will have to ensure that all crypto asset service providers qualify as obliged entities under the 4th AML directive. This will enable the EU to align with FATF recommendations and level the playing field between member states that have developed so far different approaches in that regard. Co-legislators also agreed on the urgency to ensure traceability of crypto-asset transfers and chose to align the timetable for application of this regulation with that of the markets in crypto assets (MiCA) regulation. Background This proposal is part of a package of legislative proposals to strengthen the EU's anti-money laundering and countering terrorism financing (AML/CFT) rules, presented by the Commission on 20 July 2021. The package also includes a proposal to create a new EU authority to fight money laundering. The Council agreed its position on the transfer of funds proposal on 1 December 2021. Trilogue negotiations started on 28 April and ended in the provisional agreement reached now, which still needs to be confirmed by the Council and the Parliament before it can be formally adopted. Anti-money laundering: Council agrees its negotiating mandate on transparency of crypto-asset transfers (press release, 1 December 2021) Fight against money laundering and terrorist financing (background information) EU list of non-cooperative jurisdictions for tax purposes (background information)

The member states agreed today on a mandate for negotiations with the European Parliament on the proposal for a regulation on the Union secure connec… Press material Wednesday 29 June 2022   ● Council of the EU   29/06/2022 18:44 | Press release | Secure space-based connectivity: Council adopts negotiating mandate   The member states agreed today on a mandate for negotiations with the European Parliament on the proposal for a regulation on the Union secure connectivity programme for the period 2023-2027. "The crises we are going through demonstrate every day the essential need for efficient, competitive and sovereign space communication infrastructures. Europe is continuing its initiatives to enable the emergence of connectivity constellations." Bruno Le Maire, minister for economic affairs, finance and digital and Industrial sovereignty The objective of the programme is to establish a sovereign secure space-based connectivity system for the provision of satellite communication (‘satcom’) services. It aims to provide governmental and commercial services for the protection of critical infrastructure, surveillance, and support for external action or crisis management, thereby helping to improve the EU’s resilience. This secure connectivity programme also aims to strengthen the competitiveness of EU satellite communication services through an innovative project involving various stakeholders to ensure that technological advances and their governmental use are a driver of innovation and wider commercialisation in the Union. Press material Wednesday 29 June 2022   ● Council of the EU   29/06/2022 19:19 | Press release | Visas: Council approves negotiating mandate on visa liberalisation for Kuwait and Qatar   The Permanent Representatives Committee (Coreper) approved the Council’s negotiating mandate on the liberalisation of short-stay visas for Kuwait and Qatar. On the basis of this mandate, the presidency will start negotiations with the European Parliament. The Council confirmed the Commission’s proposal to provide for visa-free travel for the citizens of these two countries when travelling to the EU for a maximum duration of 90 days per 180-day period. The Council thus took the first step towards visa liberalisation with Kuwait and Qatar, which should apply after the conclusion of bilateral agreements with these countries, in particular to ensure that full reciprocity of this exemption for EU citizens is maintained. The aim of these agreements will also be to clarify responsibilities for the readmission of nationals of each party who are in an irregular situation. The entry into force of the exemption should also take place after the effective entry into operation of the European Travel Information and Authorisation System (ETIAS), scheduled for 2023. In its negotiating mandate, the Council stressed that particular attention should also be paid to regional coherence, notably with a view to strengthening people-to-people contacts and travel between the EU and the Gulf Cooperation Council (GCC) countries. It therefore calls on the Commission to proceed rapidly to the assessment of the situation of these countries against the benchmarks with a view to exempting the other GCC member states from the visa requirement. Background On 27 April 2022, the Commission published a proposal for visa liberalisation for nationals of Kuwait and Qatar. Once the new visa regime has been agreed with Parliament and formally adopted, it will move the two countries from Annex I to Regulation (EC) No 539/2001 (countries whose nationals need a visa to enter the Sche The representatives of the governments of the member states today appointed seven judges of the General Court. Mr Marc Jaeger and Mr Dean Spielmann (… Press material Wednesday 29 June 2022   ● Council of the EU   29/06/2022 17:23 | Press release | EU Court of Justice: seven judges of the General Court appointed   The representatives of the governments of the member states today appointed seven judges of the General Court. Mr Marc Jaeger and Mr Dean Spielmann (Luxembourg), as well as Ms Mirela Stancu and Mr Ion Gâlea (Romania) were reappointed as judges of the General Court. Mr Steven Verschuur (Netherlands) was appointed as judge of the General Court for a first term of office. These appointments are for a term of office starting on 1 September 2022 and ending on 31 August 2028. They are part of the partial renewal of the General Court which takes place in 2022 and which concerns the posts of 26 Judges. Ms Beatrix Ricziová (Slovakia) was appointed as judge of the General Court for a period from the date of entry into force of the appointing Decision until 31 August 2022. This appointment was made in the context of a vacant post involved in the partial renewal of the General Court of 2016. Mr Tihamér Tóth (Hungary) was appointed as judge of the General Court following the passing of Mr Barna Berke. Mr Tóth was appointed for the remainder of Mr Berke's term of office, that is until 31 August 2022.