Enrique Palacios Rojo, Director of Regulatory Compliance and FinCrime at Onyze and member of the Expert Committee on travel rule and prevention of laundering of crypto assets at the European Banking Authority (EBA)
The European regulation for the MiCa cryptoasset market (Markets in Crypto Assets) will be released on June 30 after a multitude of drafts, long votes and delays due to translation, yes, only for issuers of the so-called e -money tokens and those tokens issued backed by a basket of securities (ART). Its full version will come into force at the end of the year (December 30).
There has been a lot of talk since 2020 about this Regulation and the criticism that has been leveled at it: “It is outdated,” “it restricts innovation,” “it is a copy of Mifid 2” or “it leaves out many relevant points.”
But then, is the arrival of MiCA good or bad news?
If we focus on what this first version leaves out, the first reaction is caution, since it seems to focus on centralized services, leaving out those that are theoretically decentralized.
We are talking about DAOs or decentralized autonomous entities, “pure” NTFs, “DeFi” decentralized finance services and the so-called unhosted wallets, such as the well-known MetaMask fox. Neither do central bank digital currencies (CBDCs).
The regulator assumes that the regulatory approach is not complete. It has been decided to undertake the regulation in different phases in order to generate a framework of trust through legal certainty and protection of institutional and retail investors without restricting innovation among those who provide decentralized services and, at the same time, being able to define responsibilities.
The objective is for traditional financial entities to be able to offer cryptoasset services themselves or through centralized providers with the maximum guarantees.
It is no coincidence that ESMA announced a few weeks ago the possibility that regulated entities can include cryptoassets in their investment catalogues, which would take a giant step in their adoption in the European Union (EU).
Therefore, if legal certainty is created for regulated financial entities to offer crypto services to professionals and retailers, MiCA 1.0 inspires more optimism.
However, MiCA leaves some hints in this first version, and suggests that after a case-by-case analysis, the responsibility falls on the platform developers or those who hold governance tokens in a relevant way.
For the European regulator, DeFi are not yet systemic, although it is concerned about issues such as the standards and auditing of smart contracts, the governance of the protocols (platforms) as well as the responsibility in DAOs, issues that will be addressed to the next review of the Regulation scheduled in 2027.
In the current geopolitical context, cryptoassets are already part of the financial services of the future. Therefore, despite the criticism, we have already seen that MiCA does seem to be fulfilling the objective of establishing what the Saxons call regulatory clarity.
MICA CALENDAR
June 30, 2024: According to titles III and IV of the regulation, the provisions on the issuance of asset-referenced tokens and e-money tokens will apply.
December 30, 2024: The provisions relating to the provision of cryptoasset services will apply. However:
Those entities that are not providing services on cryptoassets will not be able to start operating without a MiCA license from this date.
Those entities that are providing services on cryptoassets before this date may continue to do so without a license until December 30, 2025 in Spain.
