First Look At The Proposed EU Regulation On Markets In Crypto-Assets (MiCA)

The out­line of the anti­ci­pa­ted EU legis­la­ti­ve frame­work for mar­kets in cryp­to-assets is beco­m­ing clea­rer and the Euro­pean Com­mis­si­on is pre­pa­ring to publish a legis­la­ti­ve pro­po­sal by the end of Sep­tem­ber. The legis­la­ti­ve initia­ti­ve on mar­kets with cryp­to-assets fall wit­hin the broa­der Com­mis­si­on poli­cy initia­ti­ve on digi­tal finan­ce, which will also inclu­de a legis­la­ti­ve pro­po­sal on ope­ra­tio­nal resi­li­en­ce of the finan­ci­al ser­vices sec­tor. Through regu­la­ting the Com­mis­si­on aims to increa­se legal cer­tain­ty and con­su­mer and inves­tor pro­tec­tion while at the same time ensu­ring finan­ci­al sta­bi­li­ty.

In respect of the con­tent of the upco­m­ing pro­po­sal, it is expec­ted that the draft legis­la­ti­on would con­tain at least the fol­lo­wing ele­ments: (1) a bes­po­ke legis­la­ti­ve regime for mar­kets in cryp­to-assets (MiCA) and cryp­to-asset ser­vice pro­vi­ders not cove­r­ed else­whe­re in the EU finan­ci­al ser­vices regime; (2) a pilot regime for dis­tri­bu­t­ed led­ger tech­no­lo­gy (DLT) mar­ket infra­st­ruc­tures for cryp­to-assets qua­li­fy­ing as finan­ci­al instru­ments, and; (3) amend­ments to the defi­ni­ti­on of “finan­ci­al instru­ments” under MiFID II.

Four main objec­tives
The Com­mis­si­on has ambi­tious plans to esta­blish a sin­gle Euro­pean frame­work which will enab­le com­pa­nies and inves­tors ope­ra­ting in Euro­pe to take advan­ta­ge – on a secu­re legal foun­da­ti­on – of the poten­ti­al of a wide ran­ge of cryp­to-assets.

The pro­po­sal “which covers cryp­to-assets out­side exis­ting EU finan­ci­al ser­vices legis­la­ti­on, as well as e-money tokens” has four main objec­tives:

The first objec­tive is one of legal cer­tain­ty. For cryp­to-asset mar­kets to deve­lop wit­hin the EU, the­re is a need for a sound legal frame­work, clear­ly defi­ning the regu­la­to­ry tre­at­ment of all cryp­to-assets that are not cove­r­ed by exis­ting finan­ci­al ser­vices legis­la­ti­on.

The second objec­tive is to sup­port inno­va­ti­on. To pro­mo­te the deve­lop­ment of cryp­to-assets and the wider use of DLT, it is necessa­ry to put in place a safe and pro­por­tio­na­te frame­work to sup­port inno­va­ti­on and fair com­pe­ti­ti­on.

The third objec­tive is to instil appro­pria­te levels of con­su­mer and inves­tor pro­tec­tion and mar­ket inte­gri­ty given that cryp­to-assets not cove­r­ed by exis­ting finan­ci­al ser­vices legis­la­ti­on pre­sent many of the same risks as more fami­li­ar finan­ci­al instru­ments.

The fourth objec­tive is to ensu­re finan­ci­al sta­bi­li­ty.

The lea­ked draft is avail­ab­le here