MiCA: Deciphering the implications for businesses and consumers

Introduction:

The MiCA Regulation (Markets in Crypto Assets Regulation) represents a crucial step towards the regulation of the cryptoassets market in the European Union. This legal framework, which will enter into force in 2025, aims to protect investors and consumers, promote innovation and ensure financial stability.

Implications for businesses:

Firms operating in the cryptoasset sector face a number of obligations under MiCA. These include:

• Obtaining an operating licence: Companies offering cryptoasset services, such as exchange or custody, will be required to obtain a licence from the competent authorities.
• Comply with transparency requirements: Firms must provide clear and accurate information about their products and services to investors.
• Implement anti-money laundering and counter-terrorist financing measures: Firms should take measures to prevent the use of crypto-assets for illicit activities.
• Protect client funds: Firms should implement measures to protect client funds, such as segregating own funds from client funds.

Given that MICA is designed to affect cryptoassets denominated (i) asset-backed tokens, (ii) e-money tokens and (iii) cryptoassets other than the above, we differentiate the specific obligations by type of issuing firm:

• Issuers of asset-linked tokens: to obtain authorisation as an issuer of cryptoassets, it is required to have at least €350,000 in equity, maintain a reserve of assets according to turnover, draw up a detailed document on the cryptoassets to be issued, demonstrate the professional and commercial integrity of the directors and main partners, implement a governance system and submit an internal control manual similar to that requested by the Bank of Spain to register as a provider of virtual currency exchange and wallet custody services.
• Issuers of e-money tokens: the issuer must be authorised as a credit institution or e-money institution and publish a cryptoasset white paper (which must be notified to the competent authority). However, for this type of issuance, an exemption is provided where the average amount of e-money tokens in circulation does not exceed €5M in 12 months.
• Issuers of crypto-assets other than the above: such issuers must be legal persons, must also produce a white paper and must demonstrate that they have sufficient internal procedures to maintain secure access, prevent, manage and disclose conflicts of interest, and communicate clearly with the holders of crypto-assets.

Failure to comply with these obligations can result in significant penalties. It is therefore essential that companies operating in the cryptoassets sector take advice from a specialist lawyer to ensure compliance with MiCA.

Implications for consumers:

MiCA also has significant implications for consumers investing in cryptoassets. The regulation states:

• That information must be clear and accessible: Consumers will have the right to receive clear, accurate and understandable information about the cryptoassets they invest in or use. This includes information on the associated risks, the characteristics of the product or service, and the consumer’s rights.
• Increased transparency: Exchange platforms and other cryptoasset service providers will be obliged to publish transparent information about their operations, including their fees, commissions and investment policies.
• Fair dispute resolution mechanisms: Consumers will have access to fair and effective dispute resolution mechanisms in the event of problems with their investments or the services provided.
• Protection of funds: Cryptoasset service providers will be obliged to implement measures to protect their customers’ funds, such as segregation of proprietary funds and safe custody of cryptoassets.
• Prohibition of abusive practices: MiCA prohibits a number of abusive practices by cryptoasset service providers, such as misleading advertising, conflicts of interest and market manipulation.

These changes aim to protect consumers from the risks associated with investing in cryptoassets and ensure that they have access to a fair and transparent market.

ILP Abogados has a team of MiCA lawyers who can help your business comply with the new legal obligations and protect your interests. We can also advise consumers on the risks associated with investing in cryptoassets and on their rights under MiCA.

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MiCA: The new era of crypto-asset regulation in the European Union