Understanding MiCA (EU crypto-asset act), a sort of MiFID II for crypto. A 37 pages essay on the following topics:

❇️Subject matter, scope, definitions

❇️Crypto-assets other than ARTs or EMTs

❇️ARTs

❇️EMTs

❇️Authorisation and operating conditions for CASPs

❇️Prevention of Market Abuse involving crypto-assets

❇️Competent Authorities, the EBA and ESMA

❇️Delegated acts and implementing acts

❇️Transitional and final provisions

In October 2022, the Council of the EU adopted a text of the Markets in Crypto-assets Regulation (MiCA), three months after the completion of the Trilogue negotiations with the European Parliament and the European Commission and more than two years after its introduction.

MiCA is a significant piece in the Digital Finance regulatory architecture of the EU and sets the scene for how crypto-assets will become part of the mainstream financial and payments systems in Europe. The Regulation harmonises the EU framework with the Financial Action Task Force’s Recommendations through the alignment of definitions and scope of application, a step it considers crucial to tackle the risk of regulatory arbitrage.

As an EU Regulation with EEA applicability, MiCA will be both (a) directly applicable and (b) in force across the EU’s 27 Member States (together with Norway, Iceland and Liechtenstein) without the need for nationally implemented legislation (though some countries might anyway choose to pass their own legislation to optimise MiCA's effectiveness and enforceability). MiCA will thereby establish a common framework and prevent anomalies resulting from different national interpretations. As such, references in this report to the EU can be understood as references to the EEA, unless otherwise noted.

Consumer and investor protection is MiCA’s primary focus. In particular, requirements to increase transparency and regulatory oversight aim to level the playing field between the traditional and crypto-asset industries, although some provisions may unintentionally favour market incumbents. These measures should help protect consumers and investors from extensive market manipulation and fraud that has too often gone unchecked due to a lack of regulation. The protection of consumers and investors and the introduction of measures to ensure market integrity should help build trust in crypto-assets with both consumers and financial institutions. This may ultimately lead to more widespread use of crypto-assets and distributed ledger and blockchain technologies that underpin many of them.

MiCA is expected to have an impact well beyond the borders of the EU as other jurisdictions, including the United States, will be keeping an eye on the EU’s approach to crypto-asset regulation.

This report aims to provide an accurate summary of MiCA. It is meant to be provisional and indicative rather than exhaustive. It sets out MiCA’s most important requirements, providing an overview of each section or Title and some implications for the crypto-asset industry.

This report is not intended to and does not constitute legal advice and should not be relied upon as such. Further, it is based on the text as provisionally agreed by relevant EU institutions. Readers should be aware that this MiCA text remains subject to approval by the European Parliament. A vote for adoption is likely to happen in the early part of 2023.