The European Council (“Council”) has published a press release on 16 May 2023, announcing that the Markets in Crypto-Assets Regulation (“MiCA”) which was proposed by the European Commission on 24 September 2020 has been approved.
With this long-awaited approval, the European Union (“EU”) regulates crypto-assets, crypto-asset issuers and crypto-asset service providers under a legal framework set on an EU level for this sector for the first time.
MiCA is expected to have various effects on the crypto-assets sector besides enhancing innovation and the appeal of the crypto-assets. For example, MiCA will serve as a protection for investors through increasing transparency by bringing detailed framework to the cryptocurrency industry.
On top of this, MiCA defines different classes of crypto-assets such as asset-reference tokens, e-money tokens to provide legal clarity. MiCA also covers many actors in the sector such as crypto-asset issuers, crypto-asset service providers and of course investors.
MiCA also aims to bring solution to the problems caused by different local regulations in the European Union Member States (“Member States”) by creating a harmonised framework. To better enhance the cooperation between the Member States, it also allows crypto-asset issuers and crypto-asset service providers to benefit from passporting rights across the European Union as well as the European Economic Area.
MiCA builds a regulatory authorisation regime similar to the ones created for investment firms by providing new rules on the provision of some crypto-asset services such as custody, exchange, transfer and portfolio management.
MiCA also brings an obligation to submit a “white paper” or a “prospectus” to the regulator for registration of a crypto-asset offering prior to its issuance and seeks its approval for certain types of crypto-assets.
It must be pointed out that even though MiCA is a comprehensive regulation, subjects such as non-fungible tokens (NFTs), some decentralised finance models such as crypto-lending and mining are not expressly covered in the text.
MiCA is likely to enter into force in July 2023 following publication in the Official Journal, with some provisions applying a year later and the rest from January 2025.
The full text of the MiCA officially approved by the European Union is available at the link below.
https://data.consilium.europa.eu/doc/document/PE-54-2022-INIT/en/pdf
