European Parliament Adopts Regulation On Crypto-Asset Markets (MiCA)
The new regulation on crypto-assets, Markets in Crypto-Assets (MiCA), was formally adopted by the European Parliament on April 20th. This regulation is a part of a series of measures that fall under the Digital Finance Package in Europe, which aims to regulate digital finance and protect European investors. The MiCA regulation provides a balanced European regulatory framework for crypto-assets that are not covered under existing European regulations on financial instruments and products.
The French Financial Market Authority stated that MiCA will take effect in January 2025, replacing each country's own crypto regulatory framework; however, NFT and DeFi are currently outside the MiCA, and relevant EU departments will continue to assess the necessity of…
— Wu Blockchain (@WuBlockchain) April 24, 2023
MiCA Regulation
The MiCA regulation covers both the supply and admission to trading of crypto-assets, including stablecoins, and the provision of services on these crypto-assets. It also includes a framework for market abuse on crypto-assets, which will apply to anyone involved in the realization of transactions on these assets. The regulation will replace the national frameworks put in place by some EU Member States, such as the French framework introduced by the PACTE law of 22 May 2019, which established a specific regime for public offerings of tokens (ICOs) and digital asset service providers (DSPs).
The regulation requires mandatory authorization for providers providing crypto-asset services (PSCA), with requirements similar to the optional authorization under the French regime. Providers who are approved under MiCA will be able to benefit from the European passport and provide their services in all EU countries. However, non-fungible tokens (NFTs) are excluded from the scope of the MiCA Regulation, unless they meet certain criteria mentioned in the text. The European Commission will be responsible for assessing the development of this new market and the need to propose a specific regime for NFTs within 18 months of the entry into force of the text.
Evaluating Regulatory Framework
Decentralized Finance or DeFi services are also excluded from the scope of the regulation. However, the Commission will carry out an evaluation of the development of decentralized finance and its regulatory framework. The regulation is expected to increase the competitiveness of French and European players by creating a harmonized framework in Europe and ensuring better protection for investors.
The law of 9 March 2023 containing various provisions for adaptation to European Union law in the fields of economy, health, work, transport, and agriculture (DDADUE law) has clarified certain provisions related to MiCA. During the transition period, PSANs (Providers of Services on Assets Not Covered by the Existing Regulations) that benefit from a “simple” registration, a “reinforced” registration, an optional approval, or providing the services mentioned in 5° of Article L. 54-10-2 of the Monetary and Financial Code can continue to offer their services to the French public only.
The AMF (French Financial Markets Authority) will ensure that its general regulations and doctrine are adapted to facilitate the transition to MiCA for PSANs. The timeline for the regulation to enter into force is July 2023, with its applicability 18 months after this date, in January 2025. The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) will also have to publish implementing texts that will clarify the implementation of certain provisions of the Regulation. These texts will be submitted for public consultation before the 2024 final publication.
