The European Commission reflected that “The future is digital!” and released the extended “Digital Finance Package”. The most popular part of the regulation, the “Markets in Crypto-Assets” (MiCA), aims to regulate all digital representation of value or rights which will be shared or stored electronically, using distributed ledger technology (DLT) or similar. The regulation will cover all EU countries and other companies and markets which are willing to do business with EU. The framework of the MiCA has been developed since 2018, has a 4-year grace period, and will be fully applicable and mandatory by 2024.
The main objectives of the MiCA are as follows:
After the European Commission FinTech Action Plan published in early 2018, it has been seen that most crypto-asset types are out of the EU’s financial services legislation. MiCA provides extended definitions for crypto-asset services, crypto-asset service providers (CASPs), virtual asset service providers (VASPs), and asset-referenced tokens (stablecoins) and it aims to regulate all crypto-assets not covered as financial instruments by the 2nd Markets in Financial Instruments Directive (MiFID II).
According to MiCA, crypto assets will be classified into 3 main groups:
The proposed regulations will be applicable to any non-European crypto-asset service provider (CASP) seeking to market to EU clients. Among the requirements will be a need for a legal entity in an EU country and a license. There are other potential requirements such as additional licensing for what is deemed to be advisory functions, depending on the type of activity undertaken. This is certainly not a framework that only affects the EU, it will have global repercussions.
We will analyse different components of MiCA in the articles to be published in the next few weeks. For any further questions, please reach us via email@example.com or visit our CryptoIndexSeriesTM Platform for a better analysis of the crypto market space.
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