What is MiCA?
Regulation of the European Union on crypto assets (Eng. Markets in Cryptoassets – MiCA) is a regulatory measure governing the issuance and provision of services related to cryptocurrencies and stablecoins. Adopted on 20. April 2023 By The European Parliament, MiCA will enter into force sometime between 2024 and 2024. and the beginning of 2025. years.
Source: cointelegraph
What does MiCA regulation cover?
MiCA defines crypto assets as “a digital representation of values or rights that can be transferred and stored electronically, using a distributed ledger (usually blockchain) or similar technology.” Regulation defines the difference between ‘cryptocurrencies’ on the one hand and ‘tokens’ on the other. MiCA also makes demands for crypto asset issuers and service providers related to crypto assets. Crypto asset issuers must provide complete and transparent information about the crypto assets they issue and abide by disclosure and transparency rules. Providers related to crypto assets must be registered and apply security measures and compliance with anti-money laundering rules. This on paper sounds like a lot of good decisions that will reduce the volume of fraud, money laundering, uncollected taxes, etc. But we must be aware that this will contribute to reducing decentralization and anonymity. This, in turn, will result in the migration of large crypto companies from the European Union to regulatory more favorable parts of the world.
Source: cointelegraph
Classification of crypto assets
MiCA provides regulation of digital assets that use decentralized – distributed ledger (DLT ) technology Eng. decentralized ledger technology). The main types of crypto assets covered by MiCA regulation are:
1. Asset-related tokens (ART – Eng. Asset-referenced tokens), a type of crypto asset that claims to maintain a stable value by being tied to the value of several lawful means of payment, one or more commodities, or one or more crypto assets, or a combination of such assets. This category includes all crypto assets that do not qualify as ‘electronic money tokens’, and which claim to maintain a stable value tied to the value of the lawful means of payment. An example of this is Pax Gold (PAXG), supported by the equivalent amount of physical gold stored in a secure vault.
2. Electronic Money Tokens (EMT – Eng. Electronic money tokens), who claim to maintain a stable value attached to the value of legal tender. The difference between AETs and EMTs is the configuration of the underlying asset that supports the price. Art uses non-monetary assets or a basket of currencies, while EMTs use the single currency, bringing them closer to the concept of electronic money.
3. Crypto assets that are not considered ART or EMTs, such as ‘utility tokens’, intended to provide digital access to a good or service available through DLT and accepted only by the issuer of that token. Unlike tokens that represent securities, they are not considered financial instruments under the securities laws of many countries.
Source: cointelegraph
Crypto assets that are not covered by MiCA regulation
MiCA exempts relatively recent innovations like the DeFi (Decentralized Finance) industry and non-fungible tokens (NfTs). According to a definition provided by the European Central Bank, DeFi is a new way of providing financial services that relies on automated protocols instead of traditional centralized intermediaries. “All of these variables either already have their own regulation according to their nature, as is the case with value tokens, or have such specific features that legislators need to conduct further analysis to configure a regulatory framework that appropriately addresses risks,” explained María José Escribano. Central bank digital currencies (CBDCs) are also not included in MiCA regulation.
Source: cointelegraph
Why is MiCA important?
A digital asset regulation expert explained, “MiCA will provide regulatory certainty and stronger consumer protections in the cryptocurrency market while supporting innovation.” To achieve these goals, “MiCA is establishing mechanisms to ensure that stablecryptocurrencies are truly stable, requires improved market transparency and prevents excessive risks from being created, while ensuring that assets under supervision are truly protected.”
French Minister for Economy, Finance and Industrial and Digital Sovereignty, Bruno Le Maire, said: “Recent developments in this rapidly growing sector have confirmed the urgent need for regulation at the European Union level. MiCA will better protect Europeans who have invested in these assets and prevent the misuse of crypto assets, while supporting innovation to preserve the attractiveness of the European Union. This historic regulation will put an end to the crypto industry’s “wild west” and confirm the EU’s role as a standard-setter for digital assets and other digital themes.”
Source: cointelegraph
Conclusion
Time will tell whether MiCA was a smart move by the European Union to prevent illegal actions on the cryptocurrency market or whether it will contribute to the migration of large crypto companies to areas that have more convenient or freer regulation. We would certainly like to hear your opinion on this soon-to-be newly adopted law, do you think it is positive or negative for the development of the crypto market in the European Union, and which one do you think is the best crypto-regulatory regulated country? We hope you enjoyed reading today’s blog, and you can write the answer to the previously asked questions on our social networks (Twitter, Instagram).
