The crypto market has developed strongly in recent years and demand has increased. In contrast to other financial instruments, no harmonized regulation exists yet. With MiCA, the European Union (EU) proposed regulation, which aims to create a framework for the regulation of crypto assets and related services, was proposed in September 2020 as part of the EU’s Digital Finance Strategy and has been available in an agreed version since late last year (https://data.consilium.europa.eu/doc/document/ST-13198-2022-INIT/en/pdf).

The Markets in Crypto Assets (MiCA) regulation aims to promote innovation while also protecting consumers and investors. It will cover a wide range of crypto-assets, including cryptocurrencies, security tokens, and utility tokens.

The proposed regulation includes several key provisions, such as:

Licensing requirements for crypto-asset service providers (CASPs), including custodian wallet providers and virtual currency exchanges
Prudential requirements for CASPs, including capital requirements and risk management rules
Investor protection measures, such as providing information about the risks associated with crypto-assets, and requiring proper disclosure of information about the assets and the service providers
Anti-money laundering (AML) and countering the financing of terrorism (CFT) provisions, such as reporting suspicious transactions and maintaining records of transactions
Cybersecurity requirements for CASPs, including measures to protect against unauthorized access and data breaches.

While the regulation is not yet ratified and therefore might still be subject to change before it is finalized but we expect that there will not be material changes It is expected to be adopted by the European Parliament and the Council of the European Union in the coming months.

It’s important to note that MiCA will apply to firms operating in the EU, but it will also cover firms that provide services to EU citizens and firms that offer services to EU businesses but operate outside the EU. Therefore, it will have an impact on the crypto industry worldwide.

As a market participant, we follow these developments closely and keep abreast of them.

Disclaimer

The information provided is for informational and educational purposes only. It is not intended as investment advice and should not be relied upon as such. Before making any investment decisions, you should always conduct your own research. The cryptocurrency market is highly speculative and subject to various influences, such as global economic conditions, regulatory changes, and investor sentiment. Therefore, it's important to understand the risks and volatility involved in investing in cryptocurrencies.