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MiCA Regulation: Specific Legislation for Crypto Assets

27.05.2022

Adopting the MiCA Regulation, Europe is paving a way towards a harmonized legal crypto environment across 27 member states, potentially setting standards worldwide.

In the following, we will review the main purpose of the MiCA Regulation, which should enter into force by the end of the year.

 

What Does MiCA Stand For?

Markets in Crypto-Assets (MiCA) is a proposed regulation within the European Union (EU) that is intended to help streamline distributed ledger technology (DLT) and virtual asset regulation across EU member states while protecting users and investors.

 

The Purpose of MiCA Regulation

The main purpose of the MiCA Regulation is to establish a comprehensive legal framework concerning the following elements:

  1. Establishing uniform regulations to replace the existing national legislation in each EU country.
  2. Transparency and disclosure requirements for the issuance and admission to crypto asset trading.
  3. The authorization and supervision of crypto asset service providers, issuers of asset-based tokens, and issuers of electronic money tokens.
  4. The operation, organization, and governance of asset-based token issuer; electronic money token issuers; and crypto asset service providers.
  5. Consumer protection; that is, rules for the issuance, trading, exchange, and custody of crypto assets.
  6. Measures to prevent crypto market abuse.

To add, one particular element that called for limiting the use of Proof-of-Work crypto mining, based on the reason that it is an environmentally damaging practice, was voted out of the proposed regulation.

 

Unresolved Questions

As the use of terms like “asset-referenced tokens” and “e-money tokens” suggests, the MiCA Regulation focuses primarily on stablecoins, overregulating them and leaving other crypto assets out of its scope.

What does this mean? Namely, the Regulation does not cover non-fungible tokens (NFTs) and most purely decentralized – read decentralized finance (DeFi) – products.

That said, it has been pointed out that the current approach needs some tweaks, making sure that no crypto product remains unregulated.

 

Towards a Uniform Framework for Crypto Assets

Essentially, the MiCA Regulation is a wider legislative framework set to regulate all issuers and service providers in the EU dealing with crypto assets. 

Certain provisions have been removed from the draft regulation, meaning that we can’t be sure what the final MiCA Regulation will look like when it finally enters into force. Don’t worry, Coinmetro will keep you up with the latest developments.

 

Meanwhile, we encourage you to join Coinmetro’s Discord or Telegram communities to stay up to date with the cryptoverse. Alternatively, you can sign up to our platform to start trading.