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1. What is MiCA?
The Markets in Crypto Assets (MiCA) regulation is the EU proposed regulatory scheme that governs the affairs of crypto asset issuers and crypto asset service providers (CASPs) and protects crypto asset holders. Once implemented, MiCA will apply to anyone providing crypto asset services or issuing crypto assets within the EU.
2. Why is MiCA important?
EU lawmakers aim to restore confidence in crypto asset activities and services when MiCA goes into effect in 2024 after a 12-18 month transition period. MiCA would create greater legal certainty for various crypto assets that are currently unregulated or only partially regulated by EU financial services law; Along with other MiCA market integrity measures, such regulatory clarity is expected to benefit developers, service providers, and investors alike.
3. What does MiCA cover?
MiCA defines crypto assets broadly and distinguishes distributed ledger technology (DLT) assets based on their common attributes across “normal” crypto assets (such as utility tokens) and more heavily regulated stablecoins (so-called asset-referenced tokens). or electronic money). records). MiCA does not regulate CBDCs or (most) NFTs. MiCA will not apply to crypto-asset services that are provided without an intermediary in a “fully decentralized manner”, although the definition of decentralization is still up to regulators and even possible applicability for DAOs is conceivable.
4. What must market participants do to participate in cryptocurrency-related activities and services under MiCA?
To provide services in crypto assets, including exchange-based services, a CASP must have a registered office in one of the EU member states and obtain licensing authorization from the relevant local authority. In order to offer and issue crypto assets, issuers developing a protocol or similar mechanism or persons seeking admission to trading would normally be subject to the so-called white paper requirement under MiCA. This means that an issuer is required to submit to EU regulators a document that explains the characteristics of the product and how the token or other crypto-asset would operate on the blockchain. EU regulators would then determine whether token-based activity falls under the dictates of MiCA. Stablecoin issuers, in addition to their white paper requirement, will also need to obtain a license beforehand.
5. What type of investor protection rules does MiCA contemplate?
Member of the European Parliament and MiCA advocate Stefan Berger recently called the collapse of FTX a “Lehman Brothers moment” that “must be avoided”, which is “exactly what MiCA is for”. MiCA defines and prohibits various types of market manipulation, including frontal CASP execution, insider trading, and so-called wash trading. MiCA establishes disclosure and transparency controls related to these forms of market manipulation. It also equips regulators with a broad mandate to protect clients in case any wrongdoing is perceived.
