Landmark European Union (EU) regulations for the increasingly high-profile crypto-asset sector come into force today (December 30).
The 27-member bloc’s Markets in Crypto Assets Regulation (MiCA) (also abbreviated to MiCAR) was approved by European parliamentarians in April last year, making the EU the world’s first major jurisdiction to establish a comprehensive regulatory framework for crypto-assets.
As part of a series of measures relating to digital finance in Europe, MiCA regulates the issuance and services of crypto-assets not covered by pre-existing regulations on financial instruments and financial products by creating a harmonized European regulatory framework. It specifically introduces a pan-European licensing and monitoring regime for crypto-asset issuers, cryptocurrency platforms and crypto-asset service providers (“CASPs”) for a wide range of crypto-assets. , including exchange tokens (such as Bitcoin), utilities. tokens, asset-referenced tokens (“ART”), and electronic money tokens (“EMT”).
The regulation (available on 166 pages in EN) entered into force on June 29, 2023 and applies from today, with the exception of the provisions on ART and EMT, which entered into force on June 30, 2024 .
The MiCA step comes as the world waits to see how the Donald Trump-led administration will tackle crypto regulation in the United States. The president-elect, who is set to begin his second term on January 20, 2025, has pledged to make the United States the “crypto capital of the world” and the “Bitcoin superpower.”
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The EU: a global “standards body”
The center-right European People’s Party (EPP), which is the largest political group in the European Parliament, described the approval of MiCA last year as making Europe the “standard in the global market of cryptography,” adding that it would “bring order to the world.” The Wild West of crypto-assets.
MiCA rapporteur Stefan Berger, MEP, welcomed the green light from his fellow legislators, which places the EU “at the forefront of the token economy”.
“Consumers will be protected from deception and fraud, and the industry that was damaged by the collapse of FTX will be able to regain trust,” Berger said – a reference to the Bahamas-based cryptocurrency exchange whose he implosion in just a few days in November 2022 made mainstream news. across the world.
“Consumers will have all the information they need and all underlying risks around crypto-assets will have to be monitored,” continued the German MEP, believing that the regulation “brings a competitive advantage to the EU” and that “the European crypto-asset market” industry has clear regulations that do not exist in countries like the United States.
Earlier this month (December 6), Trump announced the appointment of David Sacks as the White House’s artificial intelligence (AI) and crypto “czar” – a role in which the former executive PayPal’s top executive would “guide policy…in two areas critical to the future of American competitiveness.”
The President-elect also announced (December 22) that Bo Hines would serve as Executive Director of the President’s Council of Advisors for Digital Assets (the “Crypto Council”) – a new advisory group “made up of crypto industry luminaries” which will be chaired by Sacks. Writing on his social media platform Truth Social, Trump said that Hines – a former college football player who was narrowly defeated as the Republican candidate in North Carolina’s 13th congressional district in 2022 (when he was backed by Trump) – would work with Sacks to “drive innovation and growth in the digital assets space, while ensuring industry leaders have the resources they need to succeed.”
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The progress of MiCA and DORA
The European Commission’s Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG Fisma) published an overview of progress in the implementation of MiCA and the Law on 19 December European Commission on Digital Operational Resilience (DORA).
MiCA will support innovation by “providing proportionate regulatory and supervisory treatment for crypto-asset issuers and crypto-asset service providers, thereby enabling them to develop their activities within the single market”, noted the Commission , adding that “at the same time At this time, MiCA aims to address the risks that crypto-assets may pose to investor/consumer protection, market integrity and financial stability.
As a whole, the regulation contains around 35 different mandates for delegated acts, regulatory technical standards and implementing technical standards.
The European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) produced these plans in 2024. The Commission has since been able to adopt many of them. Some have, after examination by the European Parliament and the Council, been published in the Official Journal of the EU. Others have been adopted but remain subject to scrutiny (revision). Some have yet to be adopted.
DORA came into force in January 2023 and will apply from January 17, 2025.
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“Significant milestone”: ESMA’s Ross
DG Fisma’s update came days after ESMA published its latest set of final reports containing technical standards and regulatory guidelines ahead of full implementation of MiCA.
In a December 17 press release accompanying the publication of the policy documents, ESMA President Verena Ross described the entry into force of the MiCA regime as “an important step towards establishing a regulatory framework for the crypto market.”
But she warned that it was “crucial to recognize that the new regime would not be sufficient to eliminate the uncertainty and volatility inherent in the crypto-asset market, and that investors should fully understand the risks before engaging in this space.”
“Going forward, as the transition period progresses, we will continue to provide advice and work with all NCAs (national competent authorities) to ensure the smooth implementation of MiCA and support a level playing field through to convergence actions in terms of surveillance,” she added.
As MiCA is a regulation, no national implementing legislation is required among EU member states. However, States must ensure that national legislation complies with MiCA. On December 18, 2024, the national parliament of the EU’s most populous state, Germany, adopted a law on the digitalization of financial markets (“Finanzmarktdigitalisierungsgesetz”) which will facilitate the implementation of MiCA.
*** In the United Kingdom, which left the EU in 2020, the Financial Conduct Authority (FCA) published a 62-page discussion paper on December 16, “Regulation of cryptoassets: admissions and disclosures and abuse regime market for cryptoassets” (with March 14). comment deadline 2025).
