The Markets in Crypto-Assets (MiCA) Regulation is the EU regulation governing issuance and provision of services related to crypto-assets and is expected to come into effect in July 2024. The MiCA regulation seeks to establish harmonised rules for crypto-assets at EU level which will greatly enhance the protection of consumers and investors as well as provide financial stability.
The MiCA regulation will regulate crypto-assets and crypto-asset-related services and activities carried out in the EU. Non-EU crypto-asset firms carrying out activities for EU customers must also comply with the requirements set out in the regulation.
The MiCA regulation identifies and covers three types of crypto-assets, namely:
- Asset-Referenced Tokens (ARTs);
- E- Money Tokens (EMTs); and
- Other crypto-assets not covered by existing EU legislation including Utility Tokens.
Crypto-asset services include the operation of a trading platform, custody and administration of crypto-assets on behalf of third parties, the exchange of crypto-assets for funds/other crypto-assets, the execution of orders for crypto-assets, the placing of crypto-assets, providing transfer services for crypto-assets to third parties, providing advice on crypto- assets and portfolio management on crypto-assets.
Crypto-Asset Service Providers (CASPs) and those facilitating the trading of crypto will be required to register with an oversight body. Here in Ireland, that body will be the Central Bank of Ireland. At a high level, CASPs that provide crypto-asset services to third parties on a professional basis will be subject to new rules including governance and liquidity requirements.
The MiCA regulation aims to protect investors, prevent the misuse of crypto-assets, preserve financial stability, provide regulatory clarity, and protect against market abuse and manipulation while continuing to support innovation.
Although there is much debate on how long crypto will be around, there is one certainty and that is that the crypto-asset industry must be regulated. The MiCA regulation is a very welcome addition given the uncertainty that currently surrounds the crypto-asset industry with expected far-reaching and significant implications.
Written by Noreen McGovern.
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