In order to protect investors and stop money laundering and terrorism financing, MiCA is regulating the crypto-assets industry.
The EU has established a regulatory framework that covers crypto assets, their issuers, and their service providers. The Council approved a regulation on markets in crypto-assets (MiCA), creating the first legal framework at the EU level for this industry.
In order to protect investors and stop money laundering and terrorism financing, MiCA is regulating the crypto-assets industry. It will improve transparency and establish a thorough framework for issuers and service providers, including anti-money laundering regulations compliance.
It includes stablecoin, asset referenced token, and utility token issuers. It also covers service providers like exchanges and the wallets used to store cryptocurrency. This legislative framework aims to safeguard investors, maintain financial stability, and promote innovation in the cryptoasset market.
Additionally, it creates a unified regulatory framework for the European Union, which, given the international scope of the cryptocurrency markets, is an improvement over the preexisting state-specific legislation in some member states.
The European Commission unveiled the MiCA proposal on September 24, 2020. It is a component of a larger package on digital finance, which aims to create a European strategy that promotes technological advancement while also guaranteeing financial stability and consumer protection.
In addition to the MiCA proposal, the package also includes a digital finance strategy, a Digital Operational Resilience Act (DORA) that also applies to providers of crypto-asset services, and a proposal on a pilot program for distributed ledger technology (DLT) for large-scale applications.
By ensuring that the existing legal framework does not present obstacles to the use of new digital financial instruments and that such new technologies and products fall within the scope of financial regulation and operational risk management arrangements of firms active in the EU, this package fills a gap in current EU law.
In order to support innovation and the adoption of new financial technologies, the package also offers an adequate level of investor and consumer protection.
The markets in crypto-assets MiCA negotiation mandate was adopted by the Council on November 24, 2021. A provisional agreement was reached between the co-legislators on June 30, 2022, following dialogues that began on March 31, 2022. The regulation has officially been adopted today, marking the end of the legislative process.