The European Union will become the first major jurisdiction to establish comprehensive cryptocurrency regulations with the Markets in Crypto Assets regulation, or MiCA, which takes effect in 2024. This landmark regulation promises to bring legal clarity to the crypto space and has garnered significant attention from experts and industry leaders worldwide.
MiCA encompasses over 150 pages of rules tailored to the crypto sector, as CoinDesk’s Jack Schickler explains in a recent article. Companies offering crypto services within the EU will be required to obtain authorization from one of the 27 national financial regulators. Additionally, they must publish white papers that transparently highlight potential risks without misleading investors.
Unlike traditional securities prospectuses, crypto white papers can be published before regulatory approval. However, MiCA includes provisions to prevent market abuse and insider trading, and enforcement of these regulations will largely fall to national regulators, potentially leading to competition among EU states to attract crypto businesses.
MiCA's journey has not been without controversy, and uncertainties remain. Questions about its applicability to non-fungible tokens (NFTs) and the enforcement of its rules on crypto firms operating outside the EU have yet to be fully addressed.
MiCA's global impact is anticipated due to the "Brussels effect," where pioneering EU rules often set global standards. Lawmakers and regulators worldwide are closely monitoring MiCA, with some considering similar regulations in their jurisdictions. The EU is keen to maintain its leadership in crypto regulation and prevent regulatory arbitrage.
While MiCA marks a significant step towards crypto regulation in Europe, it is not the final word. Other EU laws will continue to influence the crypto sector, addressing various issues like money laundering, tax avoidance, and cybersecurity. The crypto landscape remains dynamic, and further regulations may build upon MiCA's framework.
Join us at the State of Crypto: Policy and Regulation event on Oct. 24 to delve deeper into the world of crypto regulation. Don't miss the related session, The World of Regulation: The International Overview, where Peter Kerstens, advisor at the European Commission – which prepared the original draft of MiCA and now has overarching responsibility for implementing it – will provide insights into the evolving crypto regulatory landscape and its global implications.