MiCA II
MiCA - II
The European Parliament and of the Council released its proposal on the “Markets in Crypto-assets”, is termed as MiCA, for providing digital operational resilience, clarify European Union’s financial services rules, and to make a detailed impact analysis. In our first article we highlighted the macro perspective of its framework and the possible effects of its new requirements. Inherently, MiCA puts in place very strong capital and corporate requirements for service providers specifically for the CASP (crypto-asset service provider) types for offering specific crypto-asset services. For example, the capital requirement for CASPs will be:
- 50.000 € for Class 1 type of crypto-asset service providers who are authorised for the;
- reception and transmission of orders on behalf of third parties,
- providing advice on crypto-assets;
- execution of orders on behalf of third parties;
- placing of crypto-assets.
- 125.000 € for Class 2 type crypto-asset service providers authorised for any crypto-asset services under class 1 and additionally perform custody and administration of crypto-assets on behalf of third parties.
- 150.000 € for Class 3 type crypto-asset service providers authorised for any crypto-asset services under class 2 and additionally perform:
- exchange of crypto-assets for fiat currency that is legal tender;
- exchange of crypto-assets for other crypto-assets;
- operation of a trading platform for crypto-assets.
Furthermore, the MiCA prohibits fraudulent behaviors like market abuse, insider trading, unlawful disclosure of inside information, and market manipulation. The monetary sanctions will be limited to:
- 5 million € or 3% of annual turnover on legal persons, or
- EUR 700K on natural persons.
It is worth noting that MiCA does not address any control framework against money laundering and combating the financing of terrorism however, it has been designed to further harmonise EU legislation with the Financial Action Task Force (FATF)’s 40 Recommendations by aligning its terminology and scope of services to a certain extent.
Another crucial point is the effectiveness! The proposed regulations will be applicable to any non-European CASP seeking to market their products to EU clients. Among the requirements will be a need for a legal entity in an EU country and a license, but 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 not a framework that only affects the EU, it will have global repercussions.
We will continue analysing requirements of MiCA and effects on crypto-asset markets in the following weeks. For any further questions, please reach us via contact@cryptoindexseries.com or visit our CryptoIndexSeriesTM Platform for better analysis of the crypto market space.
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