A new set of rules for cryptocurrency exchanges in the European Union (EU) will come into effect in 2025 as part of the Market in Crypto-Assets Regulation (MiCA).  

This is a set of rules that determines how bitcoin (BTC) exchanges and other cryptocurrencies in the region will operate starting this Monday, December 30. This follows the changes that are already being implemented with the application (in the middle of the year) of the first phase of the MiCA law, focused on stablecoins.   

The guidelines, which will be applied from next January, include the “Travel Rule”. A group of precepts that exchanges - legally identified as service providers or CASPs - must now implement compulsorily. This, following the orders of the European Banking Authority (EBA).   

It is therefore understood that, during this new year, the 27 countries of the bloc will be very busy making the necessary adjustments to meet the deadlines established for MiCA to be launched and generate a new dynamic in the functioning of the eurozone ecosystem.   

As announced by ABE, under this regulation, platforms that carry out operations with cryptocurrencies in the EU  will now have to collect information from users, identify whether their transactions are related to the purchase of legal goods and services, and  monitor the transfers with which they are linked.    

Additionally, they will have to declare their policies for intermediation and cross-border transfers. The aim is to detect any activity that may appear illicit. 

MiCA arrives amidst controversy

As CriptoNoticias has reported, the arrival of MiCA is not without controversy and the debate on the advantages and disadvantages of MiCA was resumed a few weeks ago, just days before the regulations come into force. Opinions are divided and there are those who question all these requirements, due to their implications for the privacy of cryptocurrency users, and who fear their possible repercussions.  

On the other hand, there are those who support the Regulation and highlight some of its benefits. Among them is Patrick Hansen, Director of Strategy and Policy for Europe at Circle, who believes that with the new law “things will be easier for cryptocurrency companies.” 

This was explained in X, pointing out that EU regulations encourage banking access for cryptocurrencies, placing the region as a leader in the number of banks that offer services with bitcoin.

Other voices are raising the alarm about the vulnerabilities that European users may be exposed to. A few days ago, Tuur Demeester, an economist and Bitcoiner, spoke out on this issue, seeing the travel rule and MiCA as “a trap.”   

Demeester explains how, beyond the usual KYC  (know your customer) policy, exchanges will require personal data that will allow them to determine who a cryptocurrency address belongs to and its relationship to other addresses involved in a transaction. 

Hence, the fears generated by MiCA and the repeated recommendations to resort to self-custody, taking into account the importance that privacy has for Bitcoiners.   

MiCA starts with delays

Following the schedule set by the European Banking Authority (EBA), once the Regulation comes into force at the end of this year, cryptocurrency platforms will have a period of two months to declare their adherence to the Travel Rule, and  more than a year to apply the rules 100%. These are transitional times that seek to facilitate adaptation. 

However, there have been delays, according to a report published by consultancy firm Acuiti, as part of an investigation into the impact of MiCA on the European market.

So far, most exchanges have not defined the adaptation process and companies still do not have clear information on the application of the rules. There are many platforms that are still in the process of adapting their infrastructure to comply with the requirements, which implies the installation of more specialized software and tools.

It is also known from statements by a group of cryptocurrency and blockchain trade associations that the delays also affect the governments of the 27 EU countries, which are mostly unprepared for the legislation. A situation that could cause many companies to have to stop their operations.

They have therefore requested a six-month period of "no action" from the European Securities and Markets Authority (ESMA) to implement the law, in order to be able to move forward with this process. As far as we know, the authorities have refused to change the schedule.

The arrival of MiCA is therefore putting a lot of pressure on governments and companies, which will likely become more acute as 2025 progresses, the transition period is completed and the first results of the new regulation begin to be seen.