The European Union has reached a significant milestone in the regulation of the crypto-assets sector with the implementation of a new regulatory framework. The Council has officially adopted the regulation on markets in crypto-assets (MiCA), marking the first-ever EU-level legal framework for this sector.
Elisabeth Svantesson, the Finance Minister of Sweden, expressed her satisfaction with this development, emphasizing the need to establish rules that protect European investors and prevent the misuse of cryptocurrencies for illicit activities such as money laundering and terrorism financing.
MiCA’s primary objective is to safeguard investors by promoting transparency and introducing a comprehensive framework for issuers and service providers. This framework includes compliance with anti-money laundering regulations. The regulation covers various types of crypto-assets, including utility tokens, asset-referenced tokens, and stablecoins, as well as service providers such as trading venues and crypto-asset wallets. The overarching goal is to protect investors, ensure financial stability, encourage innovation, and enhance the appeal of the crypto-asset sector.
Furthermore, MiCA establishes a harmonized regulatory framework across the European Union. This uniform approach is an improvement over the current situation, where individual member states have their own legislation in place, considering the global nature of crypto markets.
The MiCA proposal was introduced by the European Commission on September 24, 2020, as part of a broader digital finance package. This package aims to develop a European approach that fosters technological advancement while ensuring financial stability and consumer protection. Alongside MiCA, the package includes a digital finance strategy, the Digital Operational Resilience Act (DORA) covering crypto-asset service providers, and a proposal for a pilot regime on distributed ledger technology (DLT) for wholesale applications.
By addressing gaps in existing EU legislation, this package ensures that the current legal framework does not impede the use of new digital financial instruments. Simultaneously, it ensures that these emerging technologies and products fall under the purview of financial regulation and operational risk management for firms operating within the EU. The package aims to support innovation and the adoption of new financial technologies while maintaining an appropriate level of consumer and investor protection.
The Council adopted its negotiating mandate on MiCA on November 24, 2021. Trilogue negotiations between the co-legislators began on March 31, 2022, resulting in a provisional agreement on June 30, 2022. The formal adoption of the regulation represents the final step in the legislative process.
As for its enforcement, according to Article 149 (1), “This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.”
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- Regulation on markets in crypto-assets (MiCA)