On April 20, after two delays since November 2022, the European Parliament had finally voted for the final adoption of MiCA. The bill aims to create a uniform regulatory framework for cryptoassets in the member states of the European Union (EU).

MICA – the proposed regulatory framework for crypto-assets in the European Union:

The European Commission proposed a regulatory framework for crypto-assets in the European Union in 2020, called the Market Infrastructure for Crypto-Assets (MICA). The proposed regulation aims to establish a harmonized framework for the issuance, sale, and trading of crypto-assets, including cryptocurrencies, security tokens, and stablecoins. It also aims to provide greater legal certainty and consumer protection in the crypto market while promoting innovation and competition.

MICA seeks to address the lack of legal clarity and regulatory fragmentation in the European crypto market, which has hindered the growth and adoption of crypto-assets in the region. The proposed regulation defines crypto-assets as digital representations of value or rights that can be transferred, stored, or traded electronically and that use cryptography to secure transactions and control the creation of new units.

Under the proposed MICA regulation, crypto-asset issuers and service providers would be required to obtain authorization from national authorities and comply with certain regulatory requirements. For instance, issuers of crypto-assets would be required to provide a prospectus containing relevant information about the issuer, the crypto-asset, and the risks associated with the investment. The prospectus would be subject to review and approval by national authorities before the issuance of the crypto-asset.

Crypto-asset service providers, such as exchanges, wallet providers, and custodians, would also be subject to regulatory requirements, such as capital and custody requirements, disclosure obligations, and anti-money laundering (AML) and counter-terrorism financing (CTF) measures. Service providers would need to obtain authorization from national authorities and comply with ongoing supervision and reporting obligations.

MICA also proposes to establish a passporting regime, which would allow authorized crypto-asset issuers and service providers to offer their services and products across the EU without the need for additional authorization in each member state. This would facilitate cross-border activity and competition while ensuring a consistent level of consumer protection and market integrity.

The proposed MICA regulation has received mixed reactions from the crypto industry and stakeholders. While some have welcomed the regulatory clarity and legal certainty that MICA could bring to the market, others have raised concerns about the potential impact of the regulation on innovation, competition, and market access.

In conclusion, MICA represents a significant step towards a comprehensive and harmonized regulatory framework for crypto-assets in the European Union. The proposed regulation seeks to strike a balance between promoting innovation and competition in the crypto market while ensuring investor protection and market integrity. However, the success of MICA would depend on its effective implementation and the ability of the EU to adapt to the rapidly evolving crypto landscape.