On Thursday 20th of April 2023, the EU Parliament approved via vote the draft Regulation on Markets in Crypto Assets, known as “MiCA”.
MiCA is the first EU legislation for tracing crypto assets transfers. It aims to set standard regulations and establish harmonised rules for crypto assets at the EU level, thereby providing legal certainty for the crypto industry and investors.
“Parliament and Council have found a fair compromise that will make it safer for people of good will to hold and trade crypto assets. However, it will make it more difficult for criminals, terrorists and sanctions evaders to misuse crypto assets”, said Assita Kanco, co-rapporteur for the Civil Liberties, Justice and Home Affairs Committee.
Key provisions of MiCA:
- Regulates the issuance and trading of crypto assets, including transparency and disclosure requirements.
- Introduces licensing of crypto asset service providers and sets their regulatory obligations.
- Strengthens confidence in crypto markets by introducing measures against market abuse, money laundering, terrorist financing and other criminal activities.
While MiCA deals with many areas of the crypto business, one interesting point is the so-called “travel rule”. Simply put, the travel rule means that information on the source of the asset and its beneficiary will have to “travel” with the transaction. This will ensure that crypto asset service providers can detect sanctioned addresses and that transfers of crypto assets are fully traceable.
MiCA will now have to be formally endorsed by the EU Council, before publication in the EU Official Journal. It will enter into force 20 days after its publication. Therefore, MiCA is expected to be published by the end of June and enter into force in July 2023, as the European Financial Services Commissioner, Mairead McGuinness, said on Wednesday.
The MiCA provisions on stablecoins will start to apply in July 2024 and the provisions on issuers of other crypto assets and crypto asset service providers will start applying in January 2025, together with the Transfer of Funds rules.
Once implemented, companies offering crypto-related services in the EU will need to get registered in one of the Member States, which will then allow them to operate across the EU.
MAP S.Platis can provide comprehensive advisory support to Crypto Asset Service Providers.
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