The Markets in Crypto Assets regulation (MiCA or the ‘Regulation’) was born out of the European Union’s Digital Finance Package which was first released in September 2020. MiCA aims to create an EU regulatory framework dedicated to crypto-assets (including stablecoins), crypto-asset service providers and crypto-asset issuers.
MiCA’s 5 main objectives:
- To provide legal clearness for non-existent EU financial services regulation crypto assets.
- To establish uniform rules for crypto-asset service providers and issuers at EU level.
- To replace existing national frameworks applicable to crypto assets not covered by existing EU financial services legislation.
- To specify clear guidelines for so-called ‘stablecoins,’ even when it is e-money.
- To create prohibitions and requirements to prevent market abuse involving crypto assets.
Scope:
This Regulation applies to persons that are engaged in the issuance of crypto-assets or provide services related to crypto-assets in the Union. It is important to note that MiCA is relevant to crypto-assets that are not financial instruments defined under MiFID II.
Key MiCA Definitions:
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Crypto-Assets |
A digital representation of value or rights which may be transferred and stored electronically, using distributed ledger technology or similar technology. |
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Distributed Ledger Technology |
A type of technology that supports the distributed recording of encrypted data. |
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Utility Token |
Type of crypto asset which is intended to provide digital access to a good or service, available on DLT, and is only accepted by the issuer of that token. |
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Asset-referenced token |
A type of crypto-asset that purports to maintain a stable value by referring to the value of several fiat currencies that are legal tender, one or several commodities or one or several crypto-assets, or a combination of such assets. |
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E-Money Token |
A type of crypto asset the main purpose of which is to be used as a means of exchange and that purports to maintain a stable value by referring to the value of a fiat currency that is legal tender. |
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Crypto-asset service provider |
Any person whose occupation or business is the provision of one or more crypto-asset services to third parties on a professional basis. |
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Crypto-asset service’ |
Crypto-asset service’ means any of the services and activities listed below:
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Authorizations of Crypto assets service providers:
MiCA will apply to a group of crypto-asset service providers (CASPs) and issuers of crypto-assets who offer such assets to third parties. More stringent additional requirements will be imposed on issuers of asset-referenced tokens and e-money tokens.
Only legal persons that have a registered office in one of the European Union (EU) Member States and have obtained an authorization from a relevant national competent authority as a crypto-asset service provider will be permitted to provide services in crypto-assets.
MiCA and AML/CFT:
MiCA emphasizes that crypto assets’ and ‘distributed ledger technology should be defined as extensively as possible to capture all types of crypto assets which currently fall outside the scope of EU legislation on financial services.
The Regulation should also contribute to the objective of fighting money laundering and the financing of terrorism. Any definition of ‘crypto-assets’ should therefore correspond to the definition of ‘virtual assets’ set out in the recommendations of the FATF.
This includes the FAFT recommendation 16 known as “the Travel Rule.”
How Apex can help
- CO/MLRO-(Crypto-VA)
- Crypto AML & CO Oversight Support Services
- Crypto-assets due diligence services
- Crypto/Virtual asset/ VASP-CASP licensing
- Crypto/ VA and blockchain Training
- VASP/CASP Due Diligence
- Crypto AML business risk assessment templates
