MICA Rules to Start in Phases in July 2024
The European Union has adopted a crypto rule called Markets in Crypto Assets, or MiCA — in the bloc’s legislative process. The regulatory framework was first proposed in September 2020 and approved by the European Parliament in April this year. Earlier in April 2023, the European Parliament lawmakers endorsed the rules and they’re expected to kick off in phases starting in July 2024.The approval by the finance ministers of each EU member was the final stage in MiCA’s approval process. This is coming following series of high-profile crypto scandals including the collapse of trading firm FTX and the implosion of the TerraUSD stablecoin.The rules are aimed at improving transparency and combating money laundering and will also cover stablecoins — which are usually tied to a hard commodity like gold that make them less volatile than normal cryptocurrencies.Other digital tokens as well as bitcoin-related services such as trading platforms and digital wallets are also subject to the rules, but not bitcoin itself.“Recent events have confirmed the urgent need for imposing rules which will better protect Europeans who have invested in crypto assets, and prevent the misuse of the crypto industry for money laundering and financing of terrorism,” said Swedish Finance Minister Elisabeth SvantessonUnder MiCA, which has been in the works since 2020, crypto companies will need approval to operate in the EU and be held accountable if they lose investors’ assets.MiCA covers a wide variety of crypto assets, from utility tokens to stablecoins, and crypto-asset service providers, such as custodial account providers, trading platforms, and exchange service providers. MICA rules require anyone who wishes to issue a crypto asset to obtain a license.It also establishes anti-money laundering requirements for service providers. For example, crypto service providers will need to collect information regarding the senders and receivers of transactions with no regard for the amounts involved. The intention is to make it much easier to track crypto transactions more generally.Mica is part of the EU’s larger digital finance package, which also establishes a pilot regime for market infrastructures based on distributed ledger technology (DLT), an overall digital finance strategy, and the Digital Operational Resilience Act (DORA). The EU’s digital finance strategy aims to foster a competitive and innovative digital finance sector in the European Union, while mitigating risks, such as money laundering and the financing of terrorism, posed by emerging technologies.The EU may be at the forefront of crypto regulation, but the need for stricter oversight is coming into focus globally. Recent developments show most countries trying to put in place rules to regulate the crypto space. U.S. Securities and Exchange Commissioner Hester Peirce recently urged Congress to clarify crypto regulations after a slew of regulatory actions against crypto exchanges. After the collapse of crypto exchange FTX, owned by Sam Bankman-Fried, regulating the crypto market has become more urgent for regulators while many countries are following suit to come up with crypto regulations to protect crypto investors.The rules require firms that want to issue, trade, and safeguard crypto assets, tokenized assets, and stablecoins in the 27-country bloc to obtain a license.The regulations will go into effect in phases starting in 2024.Elisabeth Svantesson said:“The recent events have confirmed the urgent need for imposing rules which will better protect Europeans who have invested in these assets and prevent the misuse of the crypto industry for money laundering and financing of terrorism,” The finance minister for Sweden currently holds the EU presidency.
The European Union has adopted a crypto rule called Markets in Crypto Assets, or MiCA — in the bloc’s legislative process. The regulatory framework was first proposed in September 2020 and approved by the European Parliament in April this year.
Earlier in April 2023, the European Parliament lawmakers endorsed the rules and they’re expected to kick off in phases starting in July 2024.
The approval by the finance ministers of each EU member was the final stage in MiCA’s approval process.
This is coming following series of high-profile crypto scandals including the collapse of trading firm FTX and the implosion of the TerraUSD stablecoin.
The rules are aimed at improving transparency and combating money laundering and will also cover stablecoins — which are usually tied to a hard commodity like gold that make them less volatile than normal cryptocurrencies.
Other digital tokens as well as bitcoin-related services such as trading platforms and digital wallets are also subject to the rules, but not bitcoin itself.
“Recent events have confirmed the urgent need for imposing rules which will better protect Europeans who have invested in crypto assets, and prevent the misuse of the crypto industry for money laundering and financing of terrorism,” said Swedish Finance Minister Elisabeth Svantesson
Under MiCA, which has been in the works since 2020, crypto companies will need approval to operate in the EU and be held accountable if they lose investors’ assets.
MiCA covers a wide variety of crypto assets, from utility tokens to stablecoins, and crypto-asset service providers, such as custodial account providers, trading platforms, and exchange service providers.
MICA rules require anyone who wishes to issue a crypto asset to obtain a license.
It also establishes anti-money laundering requirements for service providers. For example, crypto service providers will need to collect information regarding the senders and receivers of transactions with no regard for the amounts involved. The intention is to make it much easier to track crypto transactions more generally.
Mica is part of the EU’s larger digital finance package, which also establishes a pilot regime for market infrastructures based on distributed ledger technology (DLT), an overall digital finance strategy, and the Digital Operational Resilience Act (DORA).
The EU’s digital finance strategy aims to foster a competitive and innovative digital finance sector in the European Union, while mitigating risks, such as money laundering and the financing of terrorism, posed by emerging technologies.
The EU may be at the forefront of crypto regulation, but the need for stricter oversight is coming into focus globally.
Recent developments show most countries trying to put in place rules to regulate the crypto space. U.S. Securities and Exchange Commissioner Hester Peirce recently urged Congress to clarify crypto regulations after a slew of regulatory actions against crypto exchanges.
After the collapse of crypto exchange FTX, owned by Sam Bankman-Fried, regulating the crypto market has become more urgent for regulators while many countries are following suit to come up with crypto regulations to protect crypto investors.
The rules require firms that want to issue, trade, and safeguard crypto assets, tokenized assets, and stablecoins in the 27-country bloc to obtain a license.
The regulations will go into effect in phases starting in 2024.
Elisabeth Svantesson said:
“The recent events have confirmed the urgent need for imposing rules which will better protect Europeans who have invested in these assets and prevent the misuse of the crypto industry for money laundering and financing of terrorism,”
