The Markets in Cryptoassets Regulation (MiCA) was formally ratified and adopted by the European Union on 20 April 2023. The full text of MiCA was approved by the European Commission in October, but required several months for translation before being formally approved by the European Parliament in an overwhelming 517-38 vote yesterday.
In passing MiCA, the EU has become the first major jurisdiction to pass a comprehensive regulatory framework for crypto assets. Its main provisions are expected to come into force in mid to late 2024 after publication in the EU's official journal. MiCA will apply across the EU directly without the need for national implementation laws.
MiCA establishes requirements for a range of cryptoasset service providers and issuers, in relation to initial token offerings, stablecoin issuers, licensing of crypto asset service providers and market conduct. The regulation covers a wide variety of asset-referenced tokens, electronic money tokens and utility tokens. However, it does not extend to cover certain non-fungible tokens, security tokens and DeFi.
MiCA was developed as part of a broader regulatory effort, which involves initiatives including the Digital Operational Resilience Act, the DLT Pilot Regime and the Transfer of Funds Regulation which includes broader reforms in relation to AML/CTF and was also adopted in a 529-29 vote yesterday.
The European Commission's Mairead McGuinness described the vote as a "world first" for crypto rules.
We’re protecting consumers and safeguarding financial stability and market integrity
Lawmaker, Stefan Berger, who led negotiations on the law, said in a press release:
This puts the EU at the forefront of the token economy... This regulation brings a competitive advantage for the EU. The European crypto-asset industry has regulatory clarity that does not exist in countries like the US.
While it will still be some time before MiCA comes into force, European businesses can now start preparing for a post-MiCA future with a clearer understanding of the regulations that will apply to crypto-asset service providers in Europe. This is likely to create a competitive advantage for Europe in attracting digital asset businesses. While Europe has won the race to adopt formal regulations for cryptoassets, there remains scope for other jurisdictions to catch up given the considerable time period before formal implementation.