Intro
Crypto-asset issuers, service providers and crypto assets in general have been brought under an EU legal framework for the first time, as the European Council has already adopted MiCA, a regulation on markets in crypto-assets. The European Parliament cast its definitive vote on April 20, 2023, and the Act was subsequently ratified by the Economic and Financial Affairs Council of the EU on May 16, 2023.
Key points of MiCA
The main goal of MiCA is to provide the much needed transparency in the field of crypto, while also providing a solid and comprehensive legal framework for the up and coming industry to flourish within the borders of EU. This protective net is primarily focused on protecting investors by replacing the vague and un-uniformed legislative regulations found within individual countries in the EU.
MiCA aspires to put in place regulations for businesses that are acting in the field of crypto, covering Exchanges, Crypto- Asset Service Providers (advisory firms and portfolio managers), Crypto- Trading Platforms and Custodial Wallets. One of the most important changes coming in the field is the introduction of one authorization system to be used by every country in the EU. As such national permits will cease to exist and Crypto-asset service providers, once registered, will be able to to provide their services to the entire EU unhindered.
Crypto- Asset Service Providers, however, will have to cope with more strict regulations introduced by MiCA, which puts in place a variety of requirements in order for them to operate within the EU. Among others, these include the following:
- Crypto- Asset Service Providers will now be required to have an office in an EU country and at least one director/ resident of that EU country,
- Be transparent with their pricing, cost and fee policies by publicly sharing such information,
- Implementing Anti-Money Laundering Policies
- Guarantee continuity of services and data security by implementing policies and procedures.
On the front of token issuance, those that wish to issue a token will now be required to apply for authorization to a competent authority of their home Member State or, in the case of a credit institution, publish a whitepaper and have a legal entity that will issue and operate said tokens in accordance with the whitepaper. MiCA also lists all the necessary information in regards to the content and form, that are required when drafting such a crypto- asset whitepaper. A whitepaper that has been drafted, approved and published in this way, may withstand modifications, which will in turn require new approval by the home Member State competent authority.
Algorithmic stable coins are a thing of the past within the EU, since they are essentially banned, while fiat- backed Stable coins are required to be backed by a liquid reserve that has a 1:1 ratio, among other requirements.
The MiCA regulation has set a clear timeline as to when its various elements will take effect. All components of the MiCA regulation are expected to gradually come in full effect by December 2024, from which point in time crypto-business operations will be governed by its rules within the EU. A solid and comprehensive regulatory framework has been long awaited for crypto- companies wishing or already operating within the EU. Should MiCA be successful, it is not only expected to solidify the crypto- market within the EU and raise the willingness of investors to partake in the market, but it could also serve as a template and example for regulators outside of the EU who wish to introduce similar regulations within their own markets.
Contact
If you need our aid to prepare your project for MiCA, or for any other legal advice on crypto, feel free to contact Juris Chain Advisory at:
- https://twitter.com/JC_Advisory
- jurischainadvisory@gmail.com
Disclaimer:
The information in this guide is provided for informational purposes only. You should not construe any such information as legal, tax, investment, trading, financial, or other advice. Mentioning any of the assets in this article is not an endorsement to purchase them.