After much anticipation, the Markets in Crypto-Assets Act (MiCA) was finally passed by the European Parliament last week. This is a significant step forward for the regulation of the digital asset industry in Europe, as it will establish comprehensive guidelines for the operation, structure, and governance of digital-asset issuers. Although MiCA still needs to be approved by the European Council, it is expected to become a reality by 2024 or 2025.
The European Parliament’s decision to approve MiCA is being hailed as a milestone for the crypto asset industry by its rapporteur, Member of the European Parliament Stefan Berger. The regulation is not without its flaws, but it has been broadly welcomed by the crypto community, with Binance CEO Changpeng Zhao pledging his readiness to comply with the “pragmatic” regulation.
The lack of similar legislation in the United States has been noted by Gemini co-founder Tyler Winklevoss. Speaking with Cointelegraph, Patrick Hansen, director of EU strategy and policy at stablecoin issuer Circle, said that MiCA will enable European crypto firms to scale and grow faster, allowing licensed companies to offer their services throughout the world’s largest single market, representing roughly 450 million people.
One of the key benefits of MiCA is that it will provide clarity for market participants in the EU. This clarity will make it easier for companies to comply with regulations and establish a level playing field for all market participants. It will also provide investors with greater protection against fraudulent activities and scams. Under MiCA, digital asset issuers will have to meet a number of requirements, including disclosure obligations, prudential requirements, and governance standards.
MiCA will also create a new category of digital assets, known as “significant asset-referenced tokens” (SARTs). These tokens are defined as assets that are “referenced to an external value, which may not necessarily be a fiat currency, that can be used for the purchase of goods and services.” SARTs will be subject to a higher degree of regulation than other digital assets.
MiCA is expected to impact the entire crypto industry in Europe, including crypto exchanges, wallet providers, and other service providers. The regulation will require these companies to obtain a license from their national regulator in order to operate in the EU. The license will be valid throughout the EU, allowing companies to provide their services across the entire single market.
It is not yet clear how the United States will respond to MiCA. The lack of comprehensive crypto regulation in the US has been a source of frustration for many in the industry. While some US states have established their own regulations, there is still no federal framework for the industry. It remains to be seen whether MiCA will prompt US regulators to take action or whether they will continue to regulate through enforcement.
At least one country has already promised to adopt MiCA nationally. The deputy chairman of Ukraine’s parliamentary Tax Committee, Yaroslav Zheleznyak, revealed that his colleagues were already working on implementing “some provisions from MiCA.” This could be a sign that other countries outside the EU may follow suit and adopt similar regulations in the near future.
In conclusion, MiCA represents a significant step forward for the regulation of the digital asset industry in Europe. While the regulation is not without its flaws, it will provide much-needed clarity for market participants and greater protection for investors. The impact of MiCA on the wider crypto industry remains to be seen, but it is likely to set a precedent for other countries to follow.
