MiCA: What Europe’s cryptoassets regulation means for the continent

MiCA aims to set standards for the EU’s crypto market. 

The European Commission (EC) aims to end the crypto ‘Wild West’ by setting standards for digital assets
and their related providers through MiCA, a regulation set to come into force in 2023.

MiCA – the proposed Markets in Crypto-Assets legislation – is part of the EC’s Digital Finance Package,
published in September 2020.

Drawn up by the Directorate-General for Financial Stability, Financial Services and Capital Markets
Union, MiCA’s application in the EU has four primary objectives: building a legal framework for
cryptoassets; aiding innovation and competition; protection for consumers and investors; and financial
stability.

Over the course of 168 pages, MiCA focuses on rules for cryptoassets that are currently out of scope of
regulation – including stablecoins – and rules for cryptoasset service providers, known as CASPs in the
legal jargon. 

Provisional agreements for MiCA were reached in June and the application of MiCA was expected to be
mid-2023. However, it is now predicted to be delayed to 2024 to allow the adoption of level 2 measures.
Despite the timeline, MiCA is expected to have a large and indelible impact on the digital asset
landscape in Europe. In a press release by the EC on June 30, 2022, Bruno Le Maire, France’s minister for
the economy, finance, and industrial and digital sovereignty, stated: “This landmark regulation will put
an end to the crypto Wild West and confirms the EU’s role as a standard-setter for digital topics.”

Why was MiCA developed? 

The regulatory framework emerged from a gap in European financial services regulation. Most
cryptoassets were found to be out of scope of EU financial services legislation. The EC developed MiCA
to ensure that EU consumers could access safe cryptoassets, without obstacles, and without
compromising market stability. It also addresses cryptoasset risks and provides a single licensing regime
across all member states by 2024.  

Which cryptoassets are involved? 

MiCA defines a cryptoasset as “a digital representation of value or rights which may be transferred and
stored electronically, using distributed ledger technology or similar technology”. 

The three cryptoasset types that apply to MiCA include:

• Utility tokens. These are a type of cryptoasset intended to provide digital access to goods or services
available on DLT and which are only accepted by the issuer of that token.

• Asset-referenced tokens. These reference currencies, commodities, other cryptoassets, or baskets of

these, and aim to maintain a stable value.

• E-money tokens. Referencing only one fiat currency, these aim for a stable value and to function
similar to electronic money.
Which cryptoasset services and providers are involved? 
Many, including custodians and administrators, trading platforms and advisers. These are all considered
as cryptoasset service providers – CASPs - and captured by MiCA.

By contrast, a cryptoasset provider (CAP) pertains to any person whose occupation or business provides
cryptoasset services to third parties on a professional basis. 

What does it mean for cryptoasset service providers?

CASPs will require authorization to operate within the EU. National authorities will be obliged to issue
authorizations within 40 days. 

The biggest CASPs will have information about them transmitted by national regulators to the European
Securities and Markets Authority (Esma). CASPs with more than 15 million active users are classified as
‘Significant CASPs’ and will be supervised by competent authorities. However, Esma can intervene to
proscribe or limit the provision of cryptoasset services by a CASP. 

CASPs that offer cryptoassets to third parties will be obliged to publish a whitepaper similar to
prospectuses published under the prospectus regulation. They will also be obliged to be authorized to
issue cryptoassets and comply with particular rules when they market cryptoassets. 

Additionally, they will be obliged to conduct themselves “sincerely, justly and professionally” with
cryptoasset holders, with policies for conflict management and security access protocol maintenance.

Which cryptoassets aren’t involved? 

Although MiCA broadly includes cryptocurrencies such as bitcoin, ether and stablecoins, central bank
digital currencies (CBDC) are not included. Moreover, it does not regulate security tokens that qualify as
securities or other financial instruments. 

MiCA will not apply to cryptoassets that qualify as deposits, electronic money (except where they qualify
as electronic tokens under MiCA), financial instruments, securitization and structured deposits. 

Additionally, MiCA will not apply to, among others, European investment banks, liquidators or
administrators acting in solvency procedures, member state national banks acting as monetary or other
public authorities, or persons providing cryptoasset services for their parent companies.

What else is involved? 

• Environmental impacts: Those in the cryptoasset market will have to ensure relevant technology is
climate-friendly, in agreement with the EU’s Green Deal, and will be obliged to disclose their
environmental and climate footprint. Esma will offer further provisions specifying what such disclosures
will entail. In addition, at a later date, the EC will publish a document comparing different types of
blockchain technologies and offer policy options.

• Custody liability: Providers of custodian wallets will be liable for damages or losses caused by hacks or
preventable failures. New liability rules are also specified for custodians holding asset-referenced
tokens. 

• DeFi: Cryptoassets issued by a decentralized finance protocol qualify as cryptoassets, according to

MiCA. Therefore, CASPs conducting activities concerning these assets must comply with MiCA
requirements. 
• Stablecoins: Stablecoin issuers are obliged to back the amount of outstanding stablecoin circulation
with a liquid reserve composed of a 1/1 ratio and consisting partly of deposits. Moreover, stablecoin
issuers will offer holders a claim at any time, free of charge.

Textul mica

MiCA, short for Markets in Crypto-Assets, is a proposed regulation set to come into force in 2023 by the
European Commission (EC) with the goal of setting standards for the EU’s crypto market. The regulation
aims to end the crypto ‘Wild West’ by providing a legal framework for cryptoassets, promoting
innovation and competition, protecting consumers and investors, and maintaining financial stability.
MiCA will apply to cryptoassets that are currently out of scope of regulation, including stablecoins, and
cryptoasset service providers, known as CASPs. The regulation defines a cryptoasset as “a digital
representation of value or rights which may be transferred and stored electronically, using distributed
ledger technology or similar technology”.

The three cryptoasset types that MiCA applies to are:

 utility tokens, which provide digital access to goods or services

 asset-referenced tokens, which maintain a stable value
 e-money tokens, which function similar to electronic money.

MiCA will not apply to certain types of cryptoassets, such as security tokens and central bank digital
currencies.

Under MiCA, CASPs will be required to obtain authorization to operate within the EU and will be subject
to supervision by national authorities and the European Securities and Markets Authority. CASPs will
also be required to publish a whitepaper similar to prospectuses and comply with certain rules when
issuing cryptoassets. The regulation is expected to have a significant impact on the digital asset
landscape in Europe and is predicted to be delayed to 2024 to allow for the adoption of level 2
measures.
Facut mai bine:

MiCA, which stands for Markets in Crypto-Assets, is a proposed regulation by the European Commission
(EC) that will go into effect in 2023 with the goal of setting standards for the EU's crypto market. The
regulation aims to put an end to the crypto 'Wild West' by creating a regulatory framework for
cryptoassets, encouraging innovation and competition, protecting consumers and investors, and
preserving financial stability. MiCA will apply to cryptoassets that are currently unregulated, such as
stablecoins and cryptoasset service providers, or CASPs. The regulation defines a cryptoasset as "a
digital representation of value or rights which may be transferred and stored electronically, using
distributed ledger technology or similar technology.

MiCA applies to three types of cryptoassets:

• utility tokens, which give users digital access to goods or services.

• asset-referenced tokens with a stable value

• e-money tokens, which work in the same way as electronic money.

Certain types of cryptoassets, such as security tokens and central bank digital currencies, will be exempt
from MiCA.

CASPs will be required to obtain authorization to operate within the EU under MiCA and will be
supervised by national authorities as well as the European Securities and Markets Authority. When
issuing cryptoassets, CASPs will also be required to publish a whitepaper similar to prospectuses and
follow certain rules. The regulation is expected to have a significant impact on the European digital asset
landscape and is expected to be delayed until 2019. The regulation is expected to have a significant
impact on the European digital asset landscape and is expected to be delayed until 2024 to allow for the
deployment of level 2 measures.