About Us
MiCA Association is a freewill and educational project that has brought together crypto/VASP entrepreneurs from different parts of the European Union and the world. Its main goal is to promote the development of the crypto-related industry and provide up-to-date information on the latest changes in the legislation of European countries relating to the virtual assets sector. This project plays a key role in joining forces to promote the virtual assets industry, facilitating the exchange of knowledge and experience between entrepreneurs, as well as improving understanding of regulatory requirements in the European market. The latest news about MiCA regulations and the timing of the entry into force of the bill will be published on our website. Our association will be sharing the updates which are represented by the regulatory authorities and all the information that will have a beneficial effect on your business.
Mica regulators in Europe
MiCA, or the Markets in Crypto-Assets Regulation, is a regulatory framework that applies to both entities and individuals operating in the European Union. This comprehensive regulation covers two primary categories:
(i) Issuance, Public Offering, and Trading of Crypto-Assets: MiCA encompasses entities and individuals engaged in the creation, public offering, and admission to trading of crypto-assets. This includes ensuring compliance with regulatory standards for these activities within the EU.
(ii) Provision of Services Related to Crypto Assets: MiCA also extends its regulatory scope to those offering services related to crypto assets within the European Union. This involves a wide range of services associated with crypto-assets, further emphasizing the regulation’s all-encompassing nature.
The term ‘Crypto Asset Service Providers’ is a key focus under MiCA. This includes entities and individuals acting as intermediaries or facilitators in the crypto ecosystem. Additionally, MiCA regulates the issuers and offerors of crypto-assets, ensuring that they adhere to the established regulatory framework.
MiCA’s implementation signifies a significant step toward establishing a robust and progressive regulatory environment for crypto-assets within the European Union. This framework not only fosters regulatory credibility but also provides access to a well-established and dynamic financial ecosystem for entities and individuals involved in crypto-related activities.
- the authorization, supervision, functioning, structure, and management of crypto asset service providers (CASPs);
- the provision and issuance of crypto-assets.
- Ensuring transparency and disclosure in the issuance, public offering, and trading admission of crypto-assets on trading platforms dedicated to crypto-assets;
- Regulating the authorization, supervision, operation, organization, and governance of crypto-asset service providers, as well as issuers of asset-referenced tokens and e-money tokens;
- Safeguarding the interests of crypto-asset holders and clients of crypto-asset service providers;
- Preventing insider trading, unauthorized disclosure of insider information, and market manipulation concerning crypto-assets to uphold market integrity in the crypto-asset sphere.
MiCA, or the Markets in Crypto-Assets Regulation, provides a precise definition of a crypto-asset as a ‘digital representation of value or of a right that is capable of electronic transfer and storage using distributed ledger technology or similar technology.’ Within MiCA’s taxonomy, crypto-assets are categorized into three types based on whether their value seeks stabilization through reference to other assets.
Importantly, MiCA avoids naming specific crypto-assets such as bitcoin or ETH or using terminology commonly associated with certain types like stablecoins. Instead, each crypto-asset must be assessed under MiCA’s taxonomy to determine its classification. For example, stablecoins, meeting the criteria as crypto-assets and aiming to maintain a stable value, may be identified as asset-reference tokens (ART) or e-money tokens (EMT) based on whether they reference one or more official currencies.
For other crypto-assets meeting the definition but not intending to stabilize their value, they may fall under the ‘other’ classification. It’s crucial to note that this classification assumes the crypto-asset is not considered a financial instrument, thereby falling outside MiCA’s scope and potentially being subject to MiFID regulations.
Understanding MiCA’s nuanced taxonomy is essential for market participants, as it not only defines the nature of crypto-assets, but also determines their regulatory classification. Staying informed on these distinctions ensures compliance with MiCA’s framework, contributing to a transparent and regulated crypto landscape within the European Union.
For comprehensive guidance on MiCA compliance or assistance in navigating the complexities of crypto-asset classification, feel free to reach out to us. We are committed to providing the support needed for a secure and compliant journey within this evolving regulatory landscape.
MiCA establishes a set of obligations for those issuing crypto-assets and making them available to retail investors. The regulations governing the issuance and offering of crypto-assets under MiCA share similarities with existing EU financial services regulations, akin to the prospectus regime.
MiCA delineates distinct requirements for the offering of Asset-Reference Tokens (ARTs), E-Money Tokens (EMTs), and other categories of crypto-assets. Irrespective of the classification, the entity offering the crypto-asset is obligated to prepare a white paper detailing various facets of the crypto-asset. Issuers and offerors must adhere to additional stipulations outlined below, contingent on the specific classification of the token they are issuing or offering.
MiCA mandates that most ART offerors (unless exempted) must obtain prior authorization and adhere to multiple requirements, such as submitting ongoing regulatory reports. MiCA also places obligations on ART issuers, encompassing aspects like their behavior, releasing a white paper, marketing communications, disclosing information to investors, governance practices, prudential standards, reserve assets (including amount, investment, and custody), drafting recovery plans, and facilitating investor redemption.
Under MiCA, those offering EMTs must hold authorization as either a credit institution or an E-Money Institution. They must also adhere to regulations governing aspects such as marketing communications, the investment of funds obtained through EMT transactions, implementing recovery plans, and facilitating investor redemption.
MiCA mandates that entities offering crypto-assets not classified as ARTs or EMTs comply with regulations covering areas like marketing communications, investor redemption, and conduct.
ARTs and EMTs may receive a ‘significant’ classification based on criteria such as transaction volumes and value/market capitalization, leading to additional regulatory requirements and oversight.
MiCA introduces several obligations for crypto asset service providers (CASPs), defined as entities or businesses offering one or more crypto-asset services to clients within the EU on a professional basis.
MiCA establishes various requirements for crypto asset service providers (CASPs), which are described as companies or other entities offering one or more crypto-asset services to clients within the EU in a professional capacity.
Under MiCA, the following activities are defined as crypto-asset services:
- Custody and administration of crypto-assets on behalf of clients
- Operating a trading platform for crypto-assets
- Exchanging crypto-assets for funds
- Swapping crypto-assets for other crypto-assets
- Executing orders for crypto-assets on behalf of clients
- Placing crypto-assets
- Receiving and transmitting orders for crypto-assets on behalf of clients
- Offering advice on crypto-assets
- Managing portfolios involving crypto-assets
- Providing transfer services for crypto-assets on behalf of clients
Stay informed and compliant by understanding the nuanced aspects of MiCA, as it plays a pivotal role in shaping the landscape of crypto-assets and associated services in the EU. For any questions or assistance in navigating MiCA compliance, feel free to reach out to us. We are here to support you in ensuring a seamless and lawful operation within this evolving regulatory framework.
Main features of MiCA
- Complete Crypto-Asset Categorization: MiCA distinguishes among three categories of crypto-assets, with distinct sets of requirements applying to each group – Asset-referenced tokens (ARTs), E-money tokens (EMTs), and other crypto-assets.
- Issuer and Provider Regulations: The regulations impose strict operational, governance, and compliance standards on issuers/offering entities and service providers in the crypto-asset realm, aiming for transparency and safeguarding investor interests.
- Emphasis on Consumer Protection: MiCA emphasizes the protection of consumers by requiring clear risk disclosures and implementing robust measures to ensure the security of client assets.
- Stablecoins and Market Integrity: The regulation addresses the potential impact of stablecoins on financial stability and incorporates provisions to prevent market manipulation.
- Incorporating DeFi and NFTs: Although decentralized finance (DeFi) and non-fungible tokens (NFTs) fall outside the regulatory scope (with exceptions), MiCA establishes a groundwork for potential future regulation in these areas.
- Global Reach: MiCA applies to entities operating within the EU, including those based outside the EU, ensuring a cohesive regulatory framework
MiCA encompasses seven titles which pertain to the regulation of crypto-assets, covering aspects such as authorization, minimum provider requirements, and jurisdictional responsibilities. The regulatory framework outlines three distinct types of crypto-assets: asset-referenced tokens, e-money tokens, and other crypto-assets not falling into the aforementioned categories. MiCA marks a significant advancement in the cryptocurrency market as it represents the inaugural comprehensive regulation for the nascent technology. This framework outlines the assets subject to its oversight, specifies eligible providers of associated products and services, and designates authorities responsible for regulation and enforcement. MiCA is scheduled to become fully enforceable by the conclusion of December 2024.
MiCA (Markets in Crypto-Assets) is a legislative proposal by the European Commission aimed at regulating crypto-assets and related services within the European Union. The impact of MiCA on the economy, blockchain, and security can be discussed in the following aspects:
Economic Impact
- MiCA is designed to bring regulatory clarity and legitimacy to the crypto-asset market. This could attract institutional investors and traditional financial entities, potentially increasing capital inflow into the crypto space.
- Clear regulations may foster a more robust and sustainable crypto market, encouraging innovation and investment in blockchain and related technologies.
Blockchain Impact
- MiCA sets standards for blockchain technology and smart internal contracts. While this can enhance interoperability and security, it may also influence how blockchain networks are designed and operated.
- The regulatory framework might spur innovation in blockchain solutions as companies strive to comply with MiCA requirements efficiently.
Security Impact
- MiCA includes provisions for consumer protection, addressing issues like fraud and ensuring that users are better informed about the risks associated with crypto-assets.
- The regulation may necessitate adherence to certain cybersecurity standards, contributing to a more secure environment for crypto-asset transactions.
- Excessive or overly complex regulations could stifle innovation within the crypto space. Start-ups and smaller businesses might face challenges complying with stringent requirements, hindering their ability to contribute to economic growth.
- The implementation of MiCA could impose substantial compliance costs on businesses operating in the crypto-asset space. This may create barriers to entry, limiting the ability of new entrants to participate in the market.
- Strict regulatory requirements may lead to reduced liquidity in the crypto markets as some participants may exit due to the increased burden of compliance. This could impact the overall efficiency of these markets.
- Small and innovative projects may struggle to comply with MiCA’s regulatory demands, potentially excluding them from the market. This could limit opportunities for financial inclusion and diversity within the crypto ecosystem.
- If MiCA imposes more stringent regulations compared to other jurisdictions, it might put European businesses at a competitive disadvantage. This could lead to businesses relocating to more lenient regulatory environments.
MiCA Blog
MiCA Association UAB has established a blog dedicated to disseminating the most recent updates in European countries’ legislation concerning cryptocurrency and VASP (Virtual Asset Service Provider). This resource aims to provide convenience and valuable information to all individuals interested in European cryptocurrency regulations. Our articles are focused on topics crucial for contemporary entrepreneurs engaged in cryptocurrency, fintech projects, blockchain, and IT-related ventures.
Frequently Asked Questions
MiCA, an abbreviation for the Markets in Crypto Assets regulation, was introduced by the European Commission in 2020 as part of the digital finance package. Since its inception, stakeholders involved or interested in crypto-assets and related services have eagerly awaited the finalization of this regulation. Two years later, after extensive discussions, deliberations, and disagreements, the text of MiCA was approved by the European Council, arriving at a crucial juncture, especially in light of recent events like the FTX controversy, which underscores the pressing need for regulation in this domain.
Once MiCA is enacted, it will establish a standardized regulatory framework for cryptocurrencies at the European Union (EU) level, making it the first internationally applicable instrument to govern issuers of crypto assets, providers of related services, and certain categories of crypto assets themselves.
Additionally, MiCA will have direct applicability throughout the EU, superseding existing national laws and harmonizing regulations across member states concerning crypto assets and associated activities.
For most EU member states, implementing MiCA will entail significant efforts to either update existing regulatory frameworks that partially address crypto assets and related activities or to start afresh in crafting regulations specific to crypto assets.
Contrastingly, Malta was among the early adopters of a regulatory framework for crypto assets, establishing the Virtual Financial Assets (VFA) framework in 2018. This framework, which is modeled on the EU’s Markets in Financial Instruments Directive (MiFID), governs initial VFA offerings and outlines licensing requirements for VFA service providers. Notably, MiCA also draws upon MiFID, making the Maltese VFA framework and the EU MiCA framework notably similar.
VFA, or Virtual Financial Asset, refers to any digital medium of recording used as a medium of exchange, unit of account, or store of value, which is distinct from electronic money, financial instruments, or virtual tokens.
Under MiCA, when an EU Member State has established its own licensing regime for crypto-assets service providers (referred to as CASPs), regulators will implement a streamlined authorization procedure. This process aims to facilitate the transition of entities from a national license to a MiCA CASP license, which will be valid throughout the entire EU.
In Malta, the MFSA has already initiated the identification and analysis of disparities between MiCA and the VFA framework, striving to align the latter as closely as possible with the new EU-wide framework. This initiative positions Malta to become the first MiCA-compliant EU Member State. Consequently, existing VFA service providers licensed in Malta will be able to seamlessly transition to the MiCA framework upon its enactment, granting these operators a competitive edge over entities established in other EEA jurisdictions.
It was anticipated that the new regulation would be ratified and published in the Official Journal in Q1 2023 (with entry into force 20 days later), with most regulations scheduled to apply 12-18 months after its enactment. However, due to technical challenges in translating the text into the 24 official languages of the EU, the final vote on the MiCA regulation has been postponed and is currently slated to occur in April 2023.
One of the primary objectives of MiCA is to safeguard investors and consumers utilizing crypto assets. In pursuit of this goal, the regulation encompasses various measures for investor protection, including disclosure and transparency mandates, as well as measures aimed at combating money laundering and terrorist financing.
MiCA, the European crypto-asset legal framework, establishes regulatory requirements primarily for the following activities:
- Issuing crypto assets by either listing them on a trading platform or making a public offer.
- Providing crypto-asset services, such as crypto wallets, trading venues, order execution, order transmission, investment advice, and portfolio management.
- Trading crypto assets, including regulations regarding insider dealing prohibition.
The MiCA Regulation has a broad scope, defining crypto assets as “a digital representation of value or rights that may be electronically transferred and stored, utilizing distributed ledger technology or similar means.” However, MiCA does not encompass crypto assets qualifying as transferable securities or financial instruments under MiFID II.
The European crypto-asset legal framework, MiCA, imposes various regulatory requirements on individuals engaged in activities falling under its purview, including:
- Crypto-asset white paper: Issuers must furnish a “light prospectus,” known as a white paper, detailing characteristics, functions, and risks, subject to regulator notification and approval in some cases.
- Marketing: All marketing communications must be fair, clear, and not misleading, consistent with the white paper, and in certain instances, subject to regulator notification.
- License and location requirements: Issuers of asset-referenced tokens and e-money tokens, along with crypto-asset service providers, must obtain and maintain licenses for their operations and have an establishment within the EU.
- Market Abuse: Prohibition of insider dealing and market manipulation, along with compliance with inside information disclosure rules by issuers.
- Right of withdrawal: Retail holders may be entitled to withdraw their agreement to purchase crypto assets under certain circumstances without incurring fees or costs.
- Transparency: MiCA establishes requirements to inform the market and crypto-asset holders about asset peculiarities, provided services, and other relevant information.
We present a selection of significant terms and definitions specific to the European crypto-asset regulatory context. Please note that these terms may have different meanings when used in other contexts.
The MiCA Rulebook encompasses a compilation of legally significant documents that delineate the regulatory landscape for crypto-assets within Europe, incorporating both existing prominent legislation and forthcoming regulations. The EU’s regulatory framework for financial services, including MiCA, is generally structured across four institutional tiers.
Level 1:
At the primary level, the European Parliament and Council enact framework legislation, outlining the overarching objectives and principles of regulation. Examples of such framework legislation include the GDPR and MiCAR.
Level 2:
At the secondary level, the EU adopts, adjusts, and updates implementing measures, which furnish detailed rules and specifications for the execution of framework legislation. Typically, these measures are endorsed by the European Commission and carry binding authority in their entirety.
Delegated Acts:
The EU legislature may delegate powers to the Commission through specific provisions inscribed within legislative acts to formulate delegated acts. These non-legislative acts, adopted by the European Commission, serve to amend or supplement the non-essential elements of legislation.
Delegated acts are categorized as regulatory technical standards (RTS) or implementing technical standards (ITS). RTS provide technical refinement, specification, and determination of conditions for consistent harmonization of rules outlined in the primary legislative act, while ITS are technical implementing acts that ensure uniform application of certain provisions in the primary legislative act. In practice, RTS/ITS delineate most of the practical implications of the regulatory framework.
The draft MiCA Regulation indicates that RTS and ITS will be developed within various summarized areas, although specifics such as form, timing, etc., are not yet clear. These areas include:
- ITS on standard forms, formats, and templates for crypto-asset white papers
- RTS on procedures for approving white papers for certain stablecoins
- RTS on sustainability indicators
- ITS on complaints handling for issuers of asset-referenced tokens
- RTS and ITS on various application and notification requirements for entities offering crypto-asset services
- RTS on trading platform transparency issues
- ITS on means for publicly disclosing inside information
- RTS on template documents for cooperation arrangements with non-EU countries
- RTS on the registers ESMA shall establish
- ITS on forms, templates, and procedures for cooperation and information exchange between regulators, and between regulators and EBA/ESMA
Level 3:
At the tertiary level, regulatory bodies like the European Securities and Markets Authority (ESMA) can provide guidance to market participants on complying with rules established at level 2.
Level 4:
At the quaternary level, the Commission, national legislators, national supervisory authorities, etc., collaborate to ensure the proper enforcement of EU rules by national governments, offering supervisory practices, among other efforts.
The required capital varies depending on the company’s business type, ranging from 50,000 euros to 350,000 euros.
Investors can expect increased protection and transparency in transactions involving cryptocurrency assets.
An issuer is an entity responsible for issuing crypto assets regulated by the MiCA directive.
ICOs will be subject to stringent information disclosure rules, including the mandatory preparation of a Whitepaper and reporting on project success, aiming to protect investors’ rights.
ART tokens represent assets, while EMT tokens are digital versions of fiat currencies.
CASP will need to acquire operational licenses, ensure transparency, and inform and safeguard customers against various risks.
Traditional banks may face competition from new, more adaptable players and may need to enhance risk management practices concerning cryptocurrency assets.
MiCA is designed to regulate stablecoins, particularly ART tokens, potentially enhancing their safety and transparency for future use within the EU.
Providers of digital wallets will need to adhere to new licensing, security, and personal data protection standards.
Although MiCA does not directly regulate mining, its regulations on cryptocurrency asset circulation may indirectly influence mining activities.
Yes, obtaining a specialized CASP license is necessary for conducting cryptocurrency activities within the EU.
Blockchain projects will be obligated to adhere to new regulations, encompassing licensing and risk management requisites.
MiCA provides exemptions for specific activities and small-scale market operators.
Violating MiCA requirements can lead to substantial fines and potentially the revocation of licenses.
MiCA facilitates coordination between national and international regulators.
MiCA imposes transparency and reporting standards, potentially impacting transaction confidentiality. Additionally, Directive 2023/1113 (The Transfer of Funds Regulation), commonly referred to as the Travel Rule, will further affect the confidentiality of crypto transactions.
Cryptocurrency exchanges must comply with MiCA’s new requirements, including obtaining CASP licensing and ensuring customer rights protection.
Investors gain access to information and protection against fraud and unfair practices.
MiCA, in conjunction with TFR regulation, may limit the anonymity of cryptocurrency transactions to bolster efforts against money laundering and financial crimes.
MiCA complements existing laws, such as GDPR and AMLD, to ensure comprehensive regulatory coverage.
Private investors are not mandated to obtain a license, but they must adhere to anti-money laundering regulations and other regulatory stipulations.
DeFi projects could encounter new regulatory and transparency mandates under the MiCA Directive.
While MiCA does not directly address NFTs, its overarching principles may extend to them as well.
MiCA establishes standards that could facilitate the sustainable and secure development of the cryptocurrency market within the EU.
Issuers of utility tokens are not obligated to obtain mandatory licensing. However, depending on the token’s intended use, they may need to adhere to specific regulatory requirements, such as anti-money laundering (AML) regulations or the publication of a Whitepaper.
