Date: 20 April, 2023
The Council has approved fresh regulations regarding markets in crypto-assets (MiCA), encompassing crypto-assets, issuers of crypto-assets, and providers of crypto-asset services within the European Union. This marks the first instance of the EU establishing a comprehensive legal framework for this sector. The Council’s decision today finalizes adopting the MiCA regulation at the EU level.
“I am delighted that today we are fulfilling our commitment to commence regulating the crypto-assets sector. Recent developments have reaffirmed the pressing requirement for implementing regulations to enhance the protection of Europeans who have invested in these assets and deter the illicit use of the crypto industry for money laundering and terrorist financing purposes.”
Elisabeth Svantesson, Sweden’s Minister for Finance
MiCA will enhance investor protection through heightened transparency and establishing a comprehensive framework for issuers and service providers, encompassing adherence to anti-money laundering regulations. These newly enacted rules encompass issuers of utility tokens, asset-backed tokens, and commonly known ‘stablecoins,’ along with service providers such as trading platforms and cryptocurrency wallets. The overarching goal of this regulatory framework is to safeguard investors, ensure financial stability, encourage innovation, and bolster the appeal of the crypto-asset sector.
Additionally, it introduces a unified regulatory framework across the European Union, which, given the global nature of cryptocurrency markets, represents a significant improvement over the current scenario where some member states rely solely on their national legislation.
Context:
The MiCA proposal was introduced by the European Commission on September 24, 2020, as a component of the broader digital finance package. This package is designed to establish a European strategy promoting technological advancement while safeguarding financial stability and consumer interests. Alongside the MiCA proposal, this package encompasses several other key elements, including a digital finance strategy, the Digital Operational Resilience Act (DORA), which also extends to crypto-asset service providers, and a proposal for a pilot regime regarding distributed ledger technology (DLT) for wholesale applications.
This package serves as a crucial link in the existing EU legislation, addressing the need to prevent the current legal framework from impeding the adoption of innovative digital financial instruments. Simultaneously, it establishes that these new technologies and products should be subject to financial regulations and operational risk management practices applied by companies operating within the EU. Consequently, the package has a dual objective: facilitating innovation and the adoption of emerging financial technologies while ensuring an adequate degree of protection for consumers and investors.
The Council endorsed its negotiating mandate concerning MiCA on November 24, 2021. Subsequently, trilogue discussions among the co-legislators commenced on March 31, 2022, ultimately concluding with a provisional agreement reached on June 30, 2022.
References:
https://www.bbva.com/en/innovation/eu-markets-in-cryptoassets-mica-regulation-what-is-it-and-why-does-it-matter/