Crypto based assets are one of the major applications of the blockchain technology in finance and gain rapid popularity globally. As a reaction to this development, numerous countries are undertaking efforts to bring crypto based assets into their respective regulatory realms and to provide legislations to boost their potential and mitigate risks, such as cyber security risks and the risk of fraud.
The European Union (EU) is taking on a leading role. As part of the overarching Digital Finance Package that aims to adapt Europe for the digital age, the European Commission published in September 2020 a proposal for the Regulation of Markets in Crypto-Assets (MiCa) to provide regulations for crypto based assets not covered by existing EU financial services legislation. It further intents to harmonise the regulatory approach across the EU and to reverse the current market fragmentation that arose as a result of EU member states legislating issues related to crypto based assets heterogeneously.
MiCa as such has four interlinked main objectives: (i) creating legal certainty by providing a sound legal framework for crypto-asset markets and establishing rules for crypto-asset service providers (CASPs) and crypto-asset issuers at EU level; (ii) supporting innovation and fair competition by promoting the development of crypto-assets and the wider adoption of DLT-based solutions; (iii) ensuring a high level of consumer and investor protection and market integrity for crypto-assets; and (iv) addressing financial stability and monetary policy risks that could arise from a wide use of crypto-assets in financial markets.
The proposal was reviewed and in March 2022 it was decided to begin negotiations on the final version of MiCa together with the EU member states. On June 30th 2022, the EU Parliament and Council struck a provisional political agreement. It is expected that the proposal will transform into law by 2024, subject to the EU processes.
The adoption of MiCa at EU level will also be relevant for Swiss issuers in the case of cross-border issuances and firms seeking to enter the EU market.
last updated on July 5th 2022
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