MiCA: What Europe’s New Crypto Rules Mean for the Industry
After more than two and a half years of discussions and adjustments, the European Union looks set to pass its landmark crypto regulations.
The comprehensive suite of new rules is slated for a vote on the week of April 17.
Markets in Crypto Assets (MiCA) is part of a broader package within the EU aiming to update the bloc’s approach on several digital financial fronts.
MiCA itself focuses on crypto-asset providers, and the obligations they will have to declare. It also puts in place hefty requirements for operators of stablecoins.
Most importantly, though, it unifies the approach across all 27 member states.
This month’s vote, though, is far from the end of the story.
If members of the European Parliament approve the changes, countries have as long as 18 months to implement them.
The actual details of how MiCA should be applied will be sorted out by ESMA, the EU’s securities regulator.
Nevertheless, it marks a major milestone not just for crypto in Europe, but around the world.
Companies based in other countries will be affected if they want to offer their services to EU customers, and financial commissioner Mairead McGuinness has spoken enthusiastically about sharing ideas with her United States counterparts.
“It’s very political,” says Marina Markezic, co-founder and executive director of the European Crypto Initiative, an industry group that was formed in response to the proposal of MiCA.
“Brussels thinks that they’re coming up with very good standards and ideally they would be exported in other jurisdictions—it’s the Brussels effect.”
MiCA is concerned with laying down rules for a broad category company referred to as “crypto asset service providers” or CASPs.
This covers firms engaging in all kinds of activities, from operating a trading platform and offering custody to marketing new assets and providing crypto advice.
Under MiCA, anyone looking to publicly offer a crypto-asset will need to produce a white paper that discloses information about it.
This will include information about the issuer or the entity looking to admit it to trading, what they will do with the capital raised, what rights or obligations are attached to the asset, and what technology is underlying it.
They will also need to be upfront about possible risks to investing.
In some cases, the CASP responsible for producing this will be the issuer of the asset; but in others, it might be the trading platform offering the asset to customers.
Many in the crypto sphere will be familiar with the concept of a white paper, but Sam Tyfield, a corporate M&A lawyer at British firm Shoosmiths, says the EU rules will mandate a much tougher, standardized approach.
Drawing on his experience of amending and expanding a draft white paper to make it nominally MiCA-compliant, Tyfield says that “the amount of information and data required to do so is materially beyond current market practice for white papers and a significant challenge for most potential issuers of crypto-assets or tokens.”
“This is not a bad thing,” he tells Decrypt. “As it may lead to some of the more flaky crypto asset issuers drawing back from a project.”
Anne-Sophie Cissey, head of legal and compliance at French market maker Flowdesk, agrees.
Having come from a traditional finance background, she sees it as equivalent to the stringent standards that apply to issue equity.
“I see how people are raising funds and just saying ‘Okay, there is a pretty picture, give us money and everything will be fine’ but don’t have a plan. With MiCA, we have this kind of information.”
One thing she doesn’t want to see though is a creeping paternalism.
But what I fear—not even with MiCA but maybe with MiCA [in practice], or with what they are doing in the U.S., is they want to protect the investor from himself,” said Cissey.
“We are adults and we can make a decision.”
ByDecrypto
