A call for research on “embedded supervision” of decentralized finance (DeFi) protocols on the Ethereum blockchain has been issued by the European Union Commission, indicating that more EU regulation is about to come. The research could take 15 months to complete and be expected to cost 250,000 euros.
In the pilot, a built-in technology to monitor operations in the decentralized finance sector will be “developed, deployed, and tested.” To track DeFi activities in s real-time, researchers will also collect automated supervisory data from the Ethereum blockchain.
Similarly, on October 4, the EU parliament directed the EU commission to create a tax code for crypto that is fair, transparent, and practical. The commission has also been directed to consider a more straightforward set of tax rules for smaller transactions conducted by retail investors and small traders.
After the European Parliament enacted and signed the Markets in Crypto Assets (MiCA) bill on October 3, this is the EU’s second attempt to regulate the digital financial industry. EU developed the historic legislation to build a comprehensive legal framework for digital assets in the continent, which includes offering investor protections and marketing standards for cryptocurrency businesses.
The legislators claim that encouraging the growth of crypto assets and the broader adoption of distributed ledger technology will boost innovation (DLT).
Ursula von der Leyen, president of the European Commission, urged member states to take the same stance on cryptocurrencies to ensure that all opportunities and risks are considered.
Initially, the law contained a clause prohibiting proof-of-work mining due to its high energy use. Many of the watchdog’s critics called it an EU ban on Bitcoin mining.