Crypto Assets Regulation How can MiCA benefit the EU crypto-asset industry?

The European Commission expects the Markets in Crypto Assets Regulation (‘MiCA’) implementation to happen within the next four years. There is no actual timeframe for this proposed legislation to be put through the complex EU process before it becomes law. This is what we are being informed.

This legislation was first introduced in September 2020 as part of the EC’s Digital Finance Package, aiming to regulate cryptocurrencies throughout the EU by 2024. Once adopted, the MiCA Regulation will apply across all the EU Member States, including Malta.

MiCA aims to create an EU regulatory framework for crypto-assets that currently fall outside existing financial services legislation. It will introduce licensing and conduct of business requirements and a market abuse regime concerning crypto assets.

What are the MiCA’s regulatory objectives?

The Markets in Crypto-assets proposal presents four general objectives:

  • To provide legal certainty for crypto-assets not covered by existing EU financial services legislation,
  • To establish uniform rules for crypto-asset service providers and issuers at EU level.
  • To replace current national frameworks applicable to crypto-assets not covered by existing EU financial services legislation.
  • To establish specific rules for so-called ‘stablecoins’, including when these are e-money. 

Malta and the MiCA

During early discussions, several EU Member States had already moved ahead to adopt new national legislation for regulating the crypto-asset market. In 2018, Malta was at the forefront and adopted the Virtual Financial Assets (‘VFAs’) Regulatory Framework. The framework adopted is rigorous, with a stringent application process to obtain a VFA licence.

Given the new MiCA Proposal, Malta’s VFA Framework could be a basis for the eventual adoption and enforcement of the Markets in Crypto Assets Regulation. There is, again, the potential to attract new businesses to set up in Malta as their preferred jurisdiction.

Feel free to get in touch for further information on the MiCA Regulation.