ASSET CATEGORIES | ISSUER REQUIREMENTS | CRYPTOASSET SERVICE PROVIDERS (CASPs) CATEGORIES | CASP REQUIREMENTS |
Utility Token | White Paper notification and infomation, liability, marketing requirements. Utility and small tokens are exempted | Custody and Administration / Operation of a trading platform | All CASPs need to comply with the minimum requirements in relation to: |
Asset-Referenced Token (ART) | White Paper authorisation and incorporation, prudential, governance requirements; Enhanced requirements for significant ARTs | Exchange of crypto to crypto and crypto to fiat / Execution of orders on behalf of clients | Prudential provisions / Governance / Safekeeping of assets / Outsourcing / Complaint handling |
E-Money Token (EMT) | Limited to e-money or credit institutions. Similar prudential governance, liquidity requirements as for ARTs; Enhanced requirements for significant EMTs | Placing of cryptoassets / Reception and transmission of orders on behalf of third parties | Information disclosure (incl. sustainability) / Wind-down plans / Custody policy for custodians / Best execution policies for exchanges |
Non-Fungible Tokens (NFTs) | NFTs are out of scope, large "seies and collections" may not | Advice and portfolio management | Market abuse detection systems for trading platforms |
Security Tokens | Not covered by MiCA but from MIFID II | Providing transfer services on behalf of third parties | Suitability / knowledge tests for advisors |
As of 30 December 2024, the Markets in Cryptoassets Regulation (MiCA) has officially come into force across the European Union. MiCA represents a landmark regulatory framework designed to foster innovation and ensure robust consumer protection in the rapidly evolving cryptoasset market. Below, we provide an overview of MiCA, its implications for stakeholders, and the steps required for compliance.
Key Highlights of MiCA
Scope and Applicability: MiCA applies to issuers of cryptoassets, providers of cryptoasset services (CASPs), and issuers of stablecoins, including asset-referenced tokens (ARTs) and e-money tokens (EMTs). It covers trading, custody, exchange, and advisory services related to cryptoassets not classified as financial instruments under MiFID II.
Objectives: MiCA aims to harmonise regulations across the EU, promote fair competition, protect consumers and investors, and mitigate risks to financial stability.
Key Requirements: Issuers must publish whitepapers and register with national authorities, while CASPs need authorisation and compliance with governance and consumer protection standards. Additional rules apply to stablecoins, including prudential and liquidity requirements.
Exemptions: Small-scale issuers and certain DeFi platforms may qualify for exemptions, subject to further clarification.
Implications for Stakeholders
Cryptoasset Issuers: Prepare for enhanced scrutiny and reporting obligations
Cryptoasset Service Providers: Align operations with new governance and compliance frameworks
Investors and Consumers: Benefit from enhanced protections and market reliability
EU Member States: Harmonisation reduces regulatory arbitrage and simplifies cross-border operations
Action Plan for Compliance
Gap Analysis: Identify discrepancies between current practices and MiCA requirements
Registration and Authorisation: Initiate necessary processes with national authorities
Policy Updates: Revise governance, AML/CFT, and risk management policies
Training: Ensure staff are well-versed in MiCA’s requirements
Technology Updates: Implement or upgrade systems to meet reporting and disclosure obligations
Conclusion
MiCA marks a transformative step toward the regulation and stability of the EU crypto market. Immediate action is essential to align with MiCA, ensuring compliance and leveraging opportunities in this evolving landscape.
For tailored advice or assistance in navigating MiCA’s requirements, please do not hesitate to contact us at info@pelaghiaslaw.com
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