Main Takeaways

  • Keeping up with the evolving policies and regulations in the crypto space is increasingly important for anyone who interacts with digital assets. Committed to educating users on key matters of crypto regulation, Binance is launching Crossing the Chain, a podcast that will deliver insights from top global policy and regulation experts in an easily digestible format.

  • The first episode of Crossing the Chain focused on the Markets in Crypto-Assets (MiCA) framework adopted by the European Union, featuring Ondřej Kovařík, a Member of the European Parliament involved in the creation of the legislation, and Hugo Coelho, the Director of Government Affairs at Binance.

Today, policies and regulations governing the digital asset space evolve at a breakneck speed. While there are crypto users out there who may still think that this seemingly obscure and complicated topic has little relevance to them, make no mistake: Getting a grasp on the state of crypto regulation is increasingly essential to anyone who owns or transacts in digital assets.

Here at Binance, we consider it our mission to equip users with all the knowledge they need to thrive in a Web3-enabled future. Educating the community on how digital assets are regulated is an important focus here. As part of this push toward more – and better – crypto policy education, we are launching Crossing the Chain, a Binance podcast designed to bring insights from top policy and regulation experts in the space directly to our community.

The first episode, hosted by Rana Kortam, Director of Public Policy at Binance, zoomed into the landmark Markets in Crypto-Assets (MiCA) framework recently adopted by the European Union. Ondřej Kovařík, a Member of the European Parliament directly involved in crafting the legislation, and Hugo Coelho, the Director of Government Affairs at Binance, offered their perspectives on MiCA and its significance in shaping the global regulatory landscape. Watch the episode in full here or keep reading for a summary of the discussion.

Crossing the Chain: Crypto Policy Podcast. EP01: Unpacking MiCA and How It’s Shaping the Global Regulatory Landscape.

Legislation Three Years in the Making

MiCA is a comprehensive crypto framework that sets rules for digital asset issuers and service providers, the first of its kind to be adopted by a major jurisdiction. The legislative process for MiCA has taken nearly three years, and it was officially published June 9, 2023, it will come into force on June 29, 2023, and will see full application in 2025.

Ondřej Kovařík provided an introduction to MiCA, explaining that it brings various digital assets under regulation and sets rules for market operators, service providers, issuers of digital tokens, and contains provisions for the tokens themselves. The framework enhances consumer protection, increases trust in the sector, and introduces a licensing regime that enables passporting the license across the entire EU market.

The discussion touched on how MiCA came about, with the proposal materializing in September 2020 and undergoing around two years of work on the original draft and further ten months of translation and shaping. The focus was on investor protections and aligning with the existing anti-money laundering (AML) legislation. Setting a framework for stablecoins (called “asset-referenced tokens” in the text of the law) was a particularly challenging aspect, as discussions coincided with the collapse of the Terra ecosystem and its stablecoin, UST.

What Will The Application Look Like?

Hugo Coelho explained the specific changes that MiCA will bring, including the obligation for issuers to provide a standard form whitepaper and being accountable for its content. Exchanges will face rules to prevent market manipulation, and custody rules will protect client assets in case of insolvency. Industry players will need to make operational changes, such as reviewing coins and products offered, and implementing the right systems and controls over the next 18 months.

Looking ahead, Kovařík mentioned that MiCA's provisions will be applicable in stages, most of them kicking in in late 2024 and early 2025. The real test will be the actual robustness of the licensing process. Also, secondary legislation will be required to clarify how the provisions apply on the ground. Some areas like NFTs or DeFi are not covered, and the European Commission to address these topics.

Next Steps

When asked about taking MiCA global, Kovařík stated that it has the potential to influence other jurisdictions to adopt similar rules, but successful implementation will be crucial in driving this process. Coelho added that while other jurisdictions may not copy-paste MiCA, regulators worldwide are already working on comparable frameworks.

Other regulatory developments, such as AML and counter-terrorism financing (CTF) crypto rules, taxation considerations, and provisions for payment services also came up in the discussion. MiCA sets limits for these rules and serves as a benchmark to align other regulations.

Regarding the future, Kovařík indicated that there will not be an immediate “MiCA-2” covering the areas of digital finance not addressed by the current legislation, but one could be expected toward the end of the decade. He emphasized the importance of using the time before MiCA's implementation to foster a dialogue between the industry and regulators, ensuring a clear understanding of the rules. After all, the real work of putting the ambitious and groundbreaking set of rules into practice has only just begun.

Further Reading