Community
For a long period, the crypto-asset market has remained unregulated in the European Union. A group of EU member states has developed cryptocurrency legislation at the national level, but unified rules at the EU level have not been approved yet. To implement a pan-European approach to crypto-assets regulation and avoid legislative fragmentation in the EU member states, on October 10, 2022, the European Parliament Committee on Economic and Monetary Affairs (ECON) settled the approved text for the Regulation of Markets in Crypto-assets (hereinafter MiCA).The adoption of the MiCA regulation is one of the crucial steps to make Europe fit for the digital age and to build a future-ready economy that works for the people. MiCA regulation would apply between 12 and 18 months after the text comes into force. The final vote on MiCA legislation was recently delayed until February 2023. MiCA will not begin to have effect until early 2024.
Range of MiCA
MiCA applies to natural and legal persons and other undertakings that are engaged in the issuance, offer to the public and admission to trading of crypto-assets or that provide services related to crypto-assets in the EU.MiCA divides crypto-assets into 3 categories:
It should be noted that MiCA does not apply to crypto-assets that are regulated by existing EU frameworks such as:
Non-fungible and unique tokens (NFT) are largely excluded from the scope of MiCA, except where ownership is fractionalized. In each case, competent authorities should define a token as non-fungible and unique depending on its de facto features but not its designation by the issuer.
Issuers of crypto-assets other than asset-referenced tokens or e-money tokens
Only a legal person shall offer crypto-assets to the public in the EU. The main condition for the issuers of crypto-assets, other than asset-referenced tokens or e-money tokens, is to draft and publish a crypto-asset white paper. A white paper should be notified to the competent authority 20 working days before its publication. A crypto-asset white paper shall contain the information:
Any marketing communications relating to an offer to the public of crypto-assets, other than asset-referenced tokens or e-money tokens, or the admission of such crypto-assets to trading on a trading platform for crypto-assets, shall be fair, clear, not misleading, and consistent with the information in the crypto-asset white paper.White paper and marketing communication requirements do not apply to the issuers of crypto-assets, other than asset-referenced tokens or e-money tokens, when:
Issuers of asset-referenced tokens
To become an issuer of asset-referenced tokens (ART) legal person or other undertakings shall be authorized under the MiCA or as a credit institution. The rule above shall not apply when 12 months the average outstanding value of all ART never exceeds 5,000,000 euros or the offer to the public of the ART is solely addressed to qualified investors. Issuers of ART are also obliged to establish white papers with the resemblant content as mentioned above. Marketing communication requirements for issuers of ART are also similar.Issuers of ART shall (among other things):
For ART with a value issued higher than EUR 100 million, the issuer shall report quarterly to the competent authority, for each asset-referenced token:
When, for a given ART, the estimated quarterly average number and value of transactions per day associated with uses as means of exchange is higher than 1,000,000 transactions and 200 million euros respectively, within a single currency area, the issuer shall:
Issuers of e-money tokens
An issuer of e-money tokens (EMT) shall be certified as a credit institution or an electronic money institution. The potential offeror of EMT shall notify its competent authority 40 working days before the date on which it intends to issue EMT. No issuer of EMT shall grant an interest concerning e-money tokens.Before offering EMT to the public the issuer of EMT shall publish a crypto-asset white paper on its website with the resemblant content as mentioned above. The issuer of EMT shall notify its draft crypto-asset white paper to the relevant competent authority at least 20 working days before the date of its publication.Marketing communication requirements for issuers of EMT are similar to issuers of other crypto-assets.Other requirements for the issuers of EMT are established in Title II and III of Directive 2009/110/EC on the taking up, pursuit, and prudential supervision of the business of electronic money institutions.
Crypto-assets service providers
The following types of services are regulated under the MiCA:
According to MiCA all of the CASPs shall meet such general obligations:
Additionally, providers of the particular crypto-assets services shall comply with some specific regulatory requirements.As an exception, the following entities can provide crypto-assets services without obtaining additional authorization by notifying competent authority at least 40 days before providing those services for the first time:
Summary
It is only a matter of time before the MICA legislation comes into force. The final approval of the MiCA will provide legal assurance for crypto-assets not handled by the existing EU financial services legal framework. Establishment of the uniform rules for CASPs and issuers of crypto-assets at the EU level shall increase consumer confidence in crypto-assets by bolstering consumer protection as well as establish a foundation for the further development of the cryptocurrency market.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Oleksandr Strozhemin Co-founder and CEO at Trinetix
13 August
Elaine Mullan Head of Marketing and Business Development at Corlytics
12 August
Abhinav Paliwal CEO at PayNet Systems- A Neo Banking Software Platform
Donica Venter Marketing coordinator at Traderoot
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