The European Union signed the Markets in Crypto-Assets (MiCA) regulations it became law on May 31, ushering in the entry into force of the historic regulatory guide on crypto assets and service providers.
First drafted in 2020, the EU regulatory package will govern the issuance and scope of services related to the cryptocurrency market.
the european parliament approved the MICA regulations on April 20, and the bill was subsequently sent to the European Council for approval. On May 31, the President of the European Parliament, Roberta Metsola, and the Swedish Minister for Rural Affairs, Peter Kullgren, signed the framework into law. Sweden currently holds the presidency of the Council of the EU.
MyCA was published in the Official Journal of the European Union (DOUE) on June 9, starting the countdown for the entry into force of the law. This means that cryptocurrency companies have set deadlines to implement and comply with the MiCA requirements. The Stablecoin rules will apply from June 30, 2024 and the rules for exchanges will take effect on December 30, 2024.
MiCA defines a cryptographic asset as "a digital representation of value or rights that can be transferred and stored electronically, using distributed ledger technology or similar technology." The legislation also offers guidance on what qualifies as "cryptocurrencies" and what makes certain digital assets "tokens."
In addition, MiCA sets standards for crypto asset service providers (CASPs) and issuers of crypto assets. Crypto asset issuers must follow standards governing disclosure and openness, and provide complete and transparent information about the crypto assets they issue. CASPs must also adopt security measures and comply with anti-money laundering regulations.
The MiCA legislation establishes CASPs as separate legal entities. Service providers can obtain a license in any of the 27 EU member states and conduct business there. Service providers must be able to counter market manipulation and abuse, and will be under the supervision of regulators such as the European Banking Authority.
Stablecoin service providers will be required to provide a whitepaper containing key details about the product and the key players involved in the business. The white paper should also include the terms of the public offering, the type of blockchain verification mechanism it will use, the rights associated with the relevant crypto assets, the main risks involved for investors, and a summary to help potential buyers decide. make an informed decision. investment decision.
MiCA will not govern digital assets that qualify as transferable securities and behave like shares or equivalents. EU law does not cover non-fungible tokens (NFTs) or crypto assets already recognized as financial instruments under current law.
MiCA also does not regulate digital assets issued by central banks, be it the digital currency of the European Central Bank, the digital assets of national central banks, or the services linked to crypto assets provided by those institutions.
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David Schwed, head of blockchain cybersecurity firm Halborn, told Cointelegraph that MiCA is a pivotal development, demonstrating that a comprehensive framework can be put in place to provide clear direction to specific market segments. He added that while MiCA excludes certain aspects of cryptocurrencies, such as NFTs and decentralized finance, the regulations are an important step forward.
“This regulation is an important step forward for the crypto community. It presents a uniform framework for all EU member states, setting a precedent that I believe and hope the rest of the world will take note and consider adopting,” Schwed said.
Europe takes the lead in crypto
The passage of the MiCA regulations, almost two years after they were first proposed, has added some regulatory clarity to cryptocurrency businesses in Europe. Although they are not perfect, crypto companies have defined guidelines to adhere to and access the market.
Unlike the United States, without established legislation and increasing enforcement actions against many crypto exchanges, Europe could become a more dominant crypto hotspot.
Binance CEO Changpeng Zhao tweeted about the recent introduction of MiCA, saying that there are exciting business opportunities for supported crypto service providers in Europe.
Important dates for the industry are approaching, MiCA has now been published in the official journal of the EU: https://t.co/in3qlQO3wV
This means that cryptocurrency companies now have firm deadlines to implement and comply with the MiCA requirements. Stablecoin rules apply from June 30,… https://t.co/qQtZbxZWqV
— CZ Binance (@cz_binance) June 9, 2023
Zhao's comments came after the recent lawsuit filed by the US Securities and Exchange Commission against Binance and its CEO, alleging violations of securities law.
Kadan Stadelmann, CTO of open source blockchain technology company Kodomo, told Cointelegraph that while the efficacy of MiCA can be debated, it is undeniable that MiCA lays the groundwork for cryptocurrency regulation across the board. the world:
“[Other countries] you will probably choose a 'wait and see' approach before making your own regulations. Still, the influence of MiCA is clear; most nations will feel pressure to adopt some form of regulation to avoid being left behind in a sector that is of increasing importance.
Alex Shevchenko, CEO of layer 2 platform Aurora Labs, told Cointelegraph that the implementation of MiCA could “potentially influence lawmakers and regulators in the US to consider similar approaches, striking a balance between protecting the consumer and market development. As a result, this may lead to increased collaboration and harmonization efforts across jurisdictions."
In fact, members of the Financial Services Committee of the US House of Representatives. working on a bill which aims to establish clearer laws for certain types of cryptocurrencies and bring stablecoins under the regulatory purview of the Federal Reserve.
Crypto Legislation Around the World
While MiCA is, for the moment, a one-of-a-kind regulatory framework that will govern certain cryptographic activities in 27 countries, several jurisdictions have been actively developing some form of cryptographic legislation in recent years.
Joey Garcia, head of regulatory affairs at Xapo Bank, told Cointelegraph that the MiCA framework is often only compared to the regulatory landscape at the US border and digital industry:
“There are many other jurisdictions. Singapore's cryptocurrency regulations are extremely advanced, and Hong Kong's new framework went into effect on June 1. Smaller jurisdictions like Gibraltar have been regulating this space since 2018, developing frameworks and guidelines around critical factors like market integrity for cryptocurrency trading platforms, which is much more comprehensive. that MICA.”
Garcia said the rest of the world could learn a thing or two from MiCA, namely how to adapt classical financial services principles to nascent cryptographic technology. He adds that regulators outside the EU "will also need to learn and develop their understanding not only to implement standards, but also to be able to actively monitor and supervise those businesses."
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MiCA approval comes as Hong Kong positions itself as a regional crypto hubmaking way for stand-alone legislation separate from China's blanket ban approach.
Stadelmann added that Hong Kong definitely has the potential to become an even bigger crypto hotspot than Europe. Before China banned cryptocurrency-related businesses in 2021, “Hong Kong was previously home to several growing cryptocurrency startups. With greater regulatory certainty in 2023, I think more crypto companies will start looking at Hong Kong as a viable option,” he said.
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