The EU Council and the EU Parliament have reached a preliminary agreement on the proposal for a Regulation on Markets in Crypto Assets (MiCA). So what will this mean for the cryptocurrency space that is currently being described as a modern Wild West?
In short, it means that regulation is coming to the cryptospace. Providers of crypto assets, so-called "stablecoins" and the trading platforms and wallets where crypto assets are held are going to be regulated. This regulatory framework will protect investors and maintain financial stability, while enabling innovation and making the crypto asset sector more attractive for potential investors and therefore broadening the use of cryptocurrencies and assets[1]. This will create more clarity in the European Union, as some Member States already have national legislation for crypto assets, but no specific regulatory framework exists at EU level so far.
MiCa’s scope is aimed at the issuers of crypto-assets or that provide crypto related services[2]. The provider platforms are going to be held to a higher standard in order to ensure the protection of the cryptocurrency user/ holder. Under the new rules, providers of crypto asset services must meet high standards to protect consumers wallets and become liable when they lose investors crypto assets. The MiCa also covers all types of market abuse in all types of transactions or services, especially market manipulation and insider trading[3].
According to the MiCa providers will have to obtain a license to be active in the EU countries. These licenses will be given by the national authorities of the countries in which such a provider is active[4].
NFT’s (non-fungible tokens) will currently not fall under the scope of MiCa, but within the next 18 months the EU will conduct an extensive 18-month assessment on this matter to assess whether or not standalone rules will be needed for NFT’s. The reason for this assessment is because there is a disagreement among some EU member states regarding if NFT’s should be regulated, countries such as Lithuania, Greece and Ireland[5].
The next step will be for the provisional MiCa to be formally adopted by the EU Council and Parliament.
[1] EUR-Lex - 52020PC0593 - EN - EUR-Lex. (2020, 24 september). Eur-Lex.Europa.Eu. Geraadpleegd op 4 juli 2022, par.1 onder Reasons and Objectives van https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52020PC0593
[2] Article 2 MiCA
[3] Bloomberg. (2022, 1 juli). EU Reaches Provisional Deal on Landmark Crypto Rules. Geraadpleegd op 4 juli 2022, van https://www.bloomberg.com/tosv2.html?vid=&uuid=4cd9d294-fb67-11ec-b455-45705a67774f&url=L25ld3MvYXJ0aWNsZXMvMjAyMi0wNi0zMC9ldS1yZWFjaGVzLXByb3Zpc2lvbmFsLWRlYWwtb24tbGFuZG1hcmstY3J5cHRvLXJ1bGVz
[4] Digitaal geld: akkoord over Europese cryptoactiva-verordening (MiCA). (2022, 30 juni). European Council. Geraadpleegd op 4 juli 2022, van https://www.consilium.europa.eu/nl/press/press-releases/2022/06/30/digital-finance-agreement-reached-on-european-crypto-assets-regulation-mica/
[5] Nicolle, E., & Valero, J. (2022, 30 juni). EU Reaches Provisional Deal on Landmark Crypto Rules. Yahoo. Geraadpleegd op 4 juli 2022, van https://finance.yahoo.com/news/eu-reaches-provisional-deal-landmark-213909538.html
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