4/24/23: MiCA Regulation what it means

MiCA: Regulating Europe

After almost 2.5 years, the members of the European Parliament voted overwhelmingly (517 vs. 38) on Thursday to introduce the MiCA Regulation.

Europe now has the world's most comprehensive framework for crypto regulation and is suddenly being considered as a potential global crypto hub.

Sounds pretty significant. Here's your summary of the main contents.

These are the most important regulations:

Taxonomy: The regulation divides the various crypto assets into four different classes: Crypto-Assets (e.g. BTC/ETH), Utility Tokens (provides digital access to a commodity or service), Asset-referenced Tokens (referencing multiple currencies or assets), and E-money Tokens (tied to a currency, e.g. USDC).
Stablecoin Regulation: Only regulated credit or e-money institutions will be allowed to issue electronic money (e-money). Such stablecoins are subject to strict withdrawal and deposit regulations and may not pay interest to their owners. In addition, an issuer of such tokens must immediately cease the issuance of new tokens once either the number of daily transactions exceeds 1 million or the daily exchanged values exceed 200 million €. This is to preserve the sovereignty of the ECB.
Crypto-Asset Service Providers: Companies that want to offer crypto services (e.g. trading platforms & custodians) are subject to clear regulations. Among other things, they must collect information about senders and recipients in transactions.
Consumer Protection: Issuers of crypto assets must provide all necessary information about the project and the token in a whitepaper in the future.

MiCA does not regulate:

NFTs: To what extent NFTs fall under the MiCA regime is not 100% clear. This is because they are actually excluded, but at the same time it is suggested that they could be affected if they are issued as part of a "large series or collection."
DeFi: Fully decentralized protocols remain explicitly unaffected, but it remains to be seen when a protocol is considered fully decentralized.
Tokenized Securities: Tokenized bonds issued in Germany will continue to fall under the eWpG.

Why is this relevant?

Regulatory uncertainty is one of the biggest concerns that has kept large financial institutions away from crypto so far. Clear rules should drive institutional adoption.

In addition, the fact that all 27 member states will be subject to the same rules in the future expands the addressable market for crypto asset service providers and increases the attractiveness of Europe as a crypto location.

What happens next?

Before the new regulations come into effect, they must first appear in the Official Journal of the EU (expected in June '23). After that, another 12-18 months will pass before they come into full force.

Full versions

ENG 🇬🇧 version:

https://www.europarl.europa.eu/doceo/document/TA-9-2023-0117_EN.pdf

DE 🇩🇪 version:

https://www.europarl.europa.eu/doceo/document/TA-9-2023-0117_DE.pdf

FR 🇫🇷 version:

https://www.europarl.europa.eu/doceo/document/TA-9-2023-0117_FR.pdf

IT 🇮🇹 version:

https://www.europarl.europa.eu/doceo/document/TA-9-2023-0117_IT.pdf

ES🇪🇸 version:

https://www.europarl.europa.eu/doceo/document/TA-9-2023-0117_ES.pdf

NL🇳🇱 version:

https://www.europarl.europa.eu/doceo/document/TA-9-2023-0117_NL.pdf

All languages to select on EU website:

https://www.europarl.europa.eu/doceo/document/TA-9-2023-0117_EN.html

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