What to Expect from the Regulation on Markets in Crypto-Assets (MiCA) of the European Union
On 16 May 2023, the Council of the European Union formally approved the Regulation on Markets in Crypto-Assets (MiCA), which establishes a harmonized regulatory framework for crypto-assets throughout the European Union Member States. The European Union jas published MiCA in the Official Journal of the European Union (OJEU) on June 9th, the law is set to be effective from December 30th, 2024.
The MiCA aims for the protection of consumers and investors while reducing the dangers of financial crimes and market manipulations. Crypto-asset service providers will also need to comply with the "white-paper" requirement on their transparency and environmental and climate footprint.
What is MiCA Regulation?
Regulation on Markets in Crypto-Assets (MiCA) of the European Union is legislation on Crypto-Assets markets that pursues the goal of maximum harmonization within the EU. Since EU regulations are binding in their entirety and apply directly to all EU member states the MiCA will have immediate consequences in the EU crypto market.
What is introduced with the MiCA Regulation?
In terms of content, MiCA aims to create a comprehensive framework for public offerings, admission to trading on a trading platform, transactions, and services related to the types of crypto assets specifically targeted by MiCA.
The MiCA covers three types of crypto-assets:
- 1. asset-referenced tokens: They maintain a stable value by referencing several currencies that are recognized by law as an official means of payment, i.e. they enjoy the status of legal tender (‘fiat currencies’), one or several commodities, one or several crypto-assets, or a basket of such assets. They are used as means of payment to buy goods and services and as a store of value.
- 2. e-money Tokens: They maintain a stable value by referring to the value of only one fiat currency and are electronic surrogates for banknotes and coins. They are intended primarily as a means of payment.
- 3. utility tokens: These are crypto-assets that are solely intended to provide access to a good or service offered by the token's issuer.
Article 1 of the MiCA Regulation lays down the following:
- a) transparency and disclosure requirements for the issuance, offer to the public and admission of crypto-assets to trading on a trading platform for crypto-assets;
- b) requirements for the authorisation and supervision of crypto-asset service providers, issuers of asset-referenced tokens and issuers of electronic money tokens, as well as for their operation, organisation and governance;
- c) requirements for the protection of holders of crypto-assets in the issuance, offer to the public and admission to trading;
- d) requirements for the protection of clients of crypto-asset service providers;
- e) measures to prevent insider dealing, unlawful disclosure of inside information and market manipulation related to crypto-assets, in order to ensure the integrity of markets in crypto-assets
Conclusion:
The MiCA will have a major effect not only on the European crypto market but probably beyond. The regulation establishes a clear and unified legal framework. The new Regulation may prevent national laws from limiting the crypto sector's further growth. The use of an EU Regulation that is binding on all EU member states as the legislative choice for sustaining the harmonized market structure. As a result, the crypto sector is even more unified through the EU than other financial services.
