MiCA will be brought into force on June 29 and will take full effect by December next year, bringing long-awaited regulatory clarity to digital asset providers.
On May 17, EU lawmakers voted in favour of the long-awaited Markets in Crypto-Assets (MiCA) Regulation, a landmark legal framework regulating digital assets.
Today, the Regulation was published in the EU’s official journal, signalling the start of a new era in the digital asset economy. MiCA will enter into force in 20 days on June 29, with the full framework taking effect on 30 December, 2024. Some parts of the legislation however, namely Title III (asset referenced tokens) and Title IV (e-money tokens), will come into effect slightly earlier on June 30, 2024.
The bill proposes tighter rules on stablecoins and outlines that issuers must hold a reserve that’s segregated from their own assets and is invested in low-risk ways.
It also outlines that crypto providers must provide a white paper that discloses clear relevant information about the entity, including what they will do with capital raised, the underlying technology, and what obligations are attached to the asset. In addition, the framework asserts that crypto providers must be upfront and transparent about investment risks.
What makes MiCA unique is that it provides regulatory unity across all 27 EU countries, making compliance easier for a wide range of crypto providers. “Consumers will be protected against deception and fraud, and the sector that was damaged by the FTX collapse can regain trust,” said Stefan Berger, lead MEP for the MiCA regulation.
He added, “This regulation brings a competitive advantage for the EU. The European crypto-asset industry has regulatory clarity that does not exist in countries like the US.”
Indeed, in the US, the past few months have been a regulatory nightmare. This week, the US Securities and Exchanges Commission (SEC) filed lawsuits against both Binance and Coinbase for alleged securities law evasion. A few weeks prior, disagreement relating to crypto regulation caused a rift within SEC, with Commissioner Hester M. Peirce publicly slating the Commission’s approach to digital assets as “confusing and unworkable“.
“Stagnation, centralization, expatriation, and extinction are the watchwords of this release,” she said in her dissent of the Commission’s view that cryptocurrencies are securities.
She added, “Rather than embracing the promise of new technology as we have done in the past, here we propose to embrace stagnation, force centralization, urge expatriation, and welcome extinction of new technology.”
To read the full scope of the MiCA regulation, read here.
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