MiCA Papers
Tuesday, July 12, 2022

Provisional agreement on MiCA reached

The crypto-asset industry is in need of a clear regulatory framework that balances innovation and consumer protection. The EU's MiCA proposal, part of a larger digital finance package, aims to provide this framework. In this post, we will examine the MiCA proposal's significance for the crypto-asset industry.

On September 24, 2020, the European Commission presented a proposal for the Markets in Crypto-Assets Regulation (MiCA) as part of a larger digital finance package. The package aims to develop a European approach that fosters technological development while ensuring financial stability and consumer protection.

In addition to MiCA, the package includes a digital finance strategy, a Digital Operational Resilience Act (DORA) that covers Crypto-Asset Service Providers (CASPs), and a proposal on distributed ledger technology (DLT) pilot regime for wholesale uses. This package bridges a gap in existing EU legislation by ensuring that the current legal framework does not pose obstacles to the use of new digital financial instruments and, at the same time, ensures that such new technologies and products fall within the scope of financial regulation and operational risk management arrangements of firms active in the EU.

The goal of this package is to support innovation and the uptake of new financial technologies while providing an appropriate level of consumer and investor protection. On November 24, 2021, the Council adopted its negotiating mandate on MiCA, and on March 31, 2022, trilogues between the co-legislators began. The negotiations ended on June 30, 2022, with a provisional agreement reached.

This is a significant development for the crypto-asset industry as it provides a clear regulatory framework for market participants. The MiCA proposal is expected to provide legal certainty and increase consumer protection while fostering innovation in the crypto-asset space. The industry will have to closely monitor the developments in the coming months and adapt accordingly.