MiCA Regulation: How the EU’s Proposed Bill May Change Crypto
Although the crypto market began as a decentralized and deregulated dimension, its rapid growth has raised numerous concerns regarding consumer protection in cryptocurrency-related issues, standardization of key procedures, and prevention of potential illegal activities. Satisfactory performance of these tasks is impossible in the current deregulated crypto realm. Therefore, recently, the introduction of new regulations has become one of the most pressing issues related to crypto.
One of the latest regulatory proposals that could have a huge impact on the global crypto industry is known as the Markets in Crypto-Assets (MiCA) regulation. MiCA is a bill proposed by the European Council to regulate essential crypto-related activities within the EU. The main provisions of this EU crypto regulation include rules on the issuance and trading of crypto assets, as well as major requirements that service providers and market participants need to follow.
Being one of the most comprehensive regulatory proposals for the crypto industry to date, MiCA deserves special attention from everyone interested in the latest crypto developments. Let’s discuss the regulation’s peculiarities and major provisions in more detail.
What is MiCA, and how would it affect the world of crypto
The European Commission introduced MiCA regulation in September 2020 as part of a broader set of measures to strengthen the EU's digital finance framework. The proposal has gone through several stages since its introduction, including discussions, negotiations, and amendments to the text. The final vote on the cryptocurrency regulation is scheduled for April 18, 2023.
Key provisions of MiCA regulation
The regulation contains provisions regarding various crypto-related aspects, including the following:
These are just some of the many provisions offered by the Markets in Crypto-Assets regulation. If adopted, this document would have a tremendous impact on the world of crypto, affecting not only the EU but, ultimately, the whole world.
MiCA’s impact on crypto issuers, providers, and users
MiCA’s impact on the crypto world would primarily concern three main categories of crypto market participants: crypto issuers, crypto service providers, and crypto users.
Impact on crypto issuers
MiCA regulation is likely to have a significant impact on cryptocurrency issuers, as it introduces new requirements for registration, disclosure, and ongoing reporting. Issuers will need to provide detailed information about their operations, including the assets they introduce to the market and the risks associated with them. They will also need to implement appropriate safeguards to ensure the integrity of the assets they issue.
Impact on crypto service providers
The newly introduced EU crypto regulation may also influence cryptocurrency service providers, such as trading platforms, custodians, wallet providers, etc. Service providers will face a range of new requirements to comply with, including those related to custody, disclosure, anti-money laundering, counter-terrorism financing rules. Providers will also need to obtain licenses or register with the relevant authorities, which may involve additional costs and administrative burdens.
Impact on crypto users
Among the three categories under analysis, crypto users would benefit from MiCA the most. Under the regulation’s provisions, they can expect greater transparency and disclosure from issuers and service providers. On the other hand, MiCA’s rules regarding counter-terrorism and ant-money laundering could, to some extent, jeopardize anonymity and privacy, which are much valued by crypto users. This, however, looks like a fairly reasonable price to pay for enhanced safety that crypto users will be able to enjoy in exchange.
Pros and cons of MiCA regulation
Like any other proposed cryptocurrency regulation, depending on the perspective, MiCA has both advantages and shortcomings. Let’s look at some of the main ones:
MiCA regulation, which is to be voted on April 18, 2023, could potentially change the crypto industry not only in the EU but on the global level as well. Touching a wide variety of topics, from ultimate unification of crypto terminology to defining the legal status of crypto issuers, service providers, and users, the document could become the first comprehensive regulation of its kind and the first brick placed in the foundation of global crypto legislation.
MiCA could bring a set of positive developments to the crypto industry by protecting investors, increasing users’ trust in the market, and reducing the extent of illegal activities associated with the cryptocurrency realm. Meanwhile, some potential shortcomings, such as the complication of small providers’ access to the market and privacy issues should not be overlooked.
Overall, if MiCA is voted for and implemented adequately, its pros could easily outweigh the cons. Although today many reliable providers allow their clients to buy crypto under safe and transparent conditions, there are still plenty of other crypto players who are not so conscientious. A cryptocurrency regulation like MiCA would minimize malicious crypto agents’ adverse impact on the industry and make the crypto market much more trustworthy.
Disclaimer: Our content does not constitute financial advice. It is only intended for informational and educational purposes.