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

Introduction

On 20 April 2023, the European Union took a historic step by approving the MiCA Regulation (Markets in Crypto Assets), also known as the Regulation on Markets in Crypto Assets. This new legal framework marks a turning point in the regulation of cryptoassets in the EU, establishing a clear and harmonised set of rules for their operation.

The MICA Regulation was published on 9 June 2023, and entered into force 20 days after its publication. However, the provisions of the Regulation will apply from 30 December 2024.

What is MiCA?

The MiCA Regulation (hereinafter MiCA or the Regulation) burst onto the European financial landscape as an unprecedented legislative milestone. This comprehensive regulatory framework establishes a set of harmonised rules for the issuance, marketing and provision of services related to cryptoassets in the EU.

MiCA goes beyond simple regulation, laying the foundation for a safer, more transparent and accountable cryptoasset ecosystem. Unlike fragmented approaches that focus on specific aspects, MiCA takes a holistic view, covering everything from cryptoasset issuance to investor protection and market oversight.

MiCA sets strict requirements for the issuance of cryptoassets, requiring a detailed whitepaper, the implementation of robust governance measures and specific licensing for certain types of assets.

The regulation regulates the marketing of cryptoassets, including the advertising, promotion and sale of these assets to retail and institutional investors.

MiCA defines and regulates a wide range of cryptoasset services, such as custody, portfolio management, exchange and lending of cryptoassets.

The regulation establishes measures to protect cryptoasset investors, including the obligation to provide clear and accurate information, the implementation of risk control mechanisms and the creation of a complaints system.

MiCA creates a robust supervisory structure for the crypto-asset sector, assigning responsibilities to national competent authorities and the European Securities and Markets Authority.

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What are the implications of MiCA?

The entry into force of the MiCA Regulation will have a profound and lasting impact on the cryptoasset landscape in the European Union.

Among the main implications are the following:

• MiCA is expected to boost the professionalisation of the cryptoasset sector, attracting companies and institutional investors seeking a clear and stable regulatory environment. This will lead to an increase in the quality of services offered and greater transparency in operations.

• Similarly, the greater legal certainty and investor protection provided by MiCA should increase confidence in cryptoassets, driving their adoption and use by a wide range of actors, including individuals, businesses and financial institutions.

• MiCA is expected to contribute to the growth of the cryptoassets market in the EU, creating new opportunities for companies and entrepreneurs. This will generate greater economic dynamism and foster innovation in the sector.

• On the other hand, MiCA’s focus on promoting responsible innovation should lead to the development of new, more secure and reliable cryptoasset products and services. This will allow the full potential of these technologies to be realised while minimising the associated risks.

• MiCA establishes a level regulatory playing field that promotes fair competition among cryptoasset service providers. This will benefit consumers by offering them greater choice and more competitive prices.

• The investor protection measures implemented by MiCA, such as the obligation to provide clear and accurate information, the implementation of risk control mechanisms and the creation of a complaints system, will help protect consumers from fraud, market manipulation and other abusive practices.

• It seeks to minimise the risks to financial stability associated with crypto-assets by establishing appropriate supervisory and control mechanisms. This will help maintain the integrity of the financial system and protect investors from potential market shocks.

Ultimately, MiCA represents a step change in the treatment of crypto-assets in the European Union. By establishing a clear, comprehensive and proportionate regulatory framework. MiCA paves the way for a brighter future for this emerging technology, where innovation, security and investor protection go hand in hand.

Conclusion

If you are a cryptoasset investor, a cryptoasset service provider or a company operating in the sector, it is important that you are aware of the implications of MiCA and how it may affect you. At ILP Abogados, we have a team of cryptoasset lawyers who can advise you on MiCA compliance and help you navigate this new regulatory environment.

The cryptoasset industry is complex and constantly evolving. Hiring a crypto-asset lawyer can be a smart investment to help you protect your interests and avoid legal risks. At ILP Abogados, we do not consider ourselves a commodity. We believe that experience and specialisation are key to offering a quality legal service. That is why our team of lawyers is made up of professionals with extensive experience in the cryptoassets sector and a deep knowledge of MiCA regulations.

If you need legal advice on MiCA or any other matter related to cryptoassets, do not hesitate to contact ILP Abogados. We will offer you personalised attention and help you find the best solution for your needs.

At ILP Abogados, we help you navigate the complex world of cryptoassets with security and confidence.

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