New Rules on Crypto-Assets (MiCA) Adopted by the EU Council

The European Union has taken a significant step towards regulating the crypto-assets sector by implementing a new regulatory framework. The Council has officially adopted the regulation on markets in crypto-assets (MiCA), marking the first time that an EU-level legal framework has been established for this sector.

Elisabeth Svantesson, the Finance Minister of Sweden, expressed her satisfaction with this development, emphasizing the necessity of imposing rules to safeguard European investors and prevent the misuse of cryptocurrencies for illicit activities such as money laundering and terrorism financing.

MiCA aims to protect investors by enhancing transparency and introducing a comprehensive framework for issuers and service providers. This framework includes adherence to anti-money laundering regulations. The regulation covers various types of crypto-assets, such as utility tokens, asset-referenced tokens, and stablecoins, as well as service providers like trading venues and crypto-asset wallets. The overarching goal is to safeguard investors, preserve financial stability, foster innovation, and enhance the attractiveness of the crypto-asset sector.

Additionally, MiCA establishes a harmonized regulatory framework across the European Union. Given the global nature of crypto markets, this uniform approach is an improvement over the current situation, where some member states have individual legislation in place.

The MiCA proposal was presented by the European Commission on September 24, 2020, as part of the broader digital finance package. This package seeks to develop a European approach that promotes technological advancement while ensuring financial stability and consumer protection. Alongside MiCA, the package includes a digital finance strategy, the Digital Operational Resilience Act (DORA) covering crypto-asset service providers, and a proposal for a pilot regime on distributed ledger technology (DLT) for wholesale applications.

By bridging gaps in existing EU legislation, this package ensures that the current legal framework does not hinder the use of new digital financial instruments. Simultaneously, it ensures that these emerging technologies and products fall under the purview of financial regulation and operational risk management for firms operating in the EU. The package aims to support innovation and the adoption of new financial technologies while maintaining an appropriate level of consumer and investor protection.

The Council adopted its negotiating mandate on MiCA on November 24, 2021. Trilogue negotiations between the co-legislators commenced on March 31, 2022, culminating in a provisional agreement on June 30, 2022. Today’s formal adoption of the regulation represents the final step in the legislative process.

When will it be enforced? According to Art. 149 (1):

“This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union”

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