15th March 2022 > > Markets in Crypto Assets.

tl;dr

Markets in Crypto Assets (MiCA) has been approved by the European Parliament without reference to environmental sustainability standards.

Market Snap (at time of writing)

Market Wrap

Treasuries selling off big-time with a 38bp move wider in just 9 days. That’s four points off the value of a 10-year bond portfolio and will be causing pensions funds and other investment vehicles some significant pain. This could be the key financial story of 2022, with the dollar devaluing against staples instead of hard assets as quantitative easing comes to an end, in the US at least.

In the UK 10-year mortgage fixes are still available at less than 2%, but probably not for long. I recently took some 10-year money at 1.79% and that is going to look extraordinarily cheap by the end of this year. Even if you don’t need the cash, paying less than 2% per annum to turbo-charge your crypto portfolio is a winning trade in my opinion (NOT financial advice).

Curious Cryptos’ Commentary – Markets in Crypto Assets (MiCA)

The European Parliament voted last night to accept the MiCA directive – which is undoubtedly good news (see yesterday’s CCC) – with the text relating to “banning” proof-of-work (POW) coins taken out – which is undoubtedly even better news.

MiCA is a regulatory framework with 126 articles and a detailed plan for the implementation of all 126 articles.

The offending piece of text mandated that the consensus mechanism for the relevant blockchain adhered to certain environmental standards. It received only minority support from the Green faction and the Progressive Alliance of Socialists and Democrats. Let us hope it will not rear its ugly head again.

MiCA is a great step forward for the development of the crypto industry in Europe, giving businesses more certainty of the regulatory environment, thus significantly lowering the cost of capital.

The key problem now is that nearly two years are first being introduced by the European Commission in 2020, the next step is a “trilogue” between the European Commission, European Council, and the European Parliament, even though all three bodies have voted and approved the core details.

A trilogue has a minimum life span of many months, and potentially many years. If only the politicians would get a wriggle on.