On 9 June 2023, the Market in Crypto Assets Regulation on (“MiCAR”), which amends Regulations (EU) 1093/2010 and (EU) 1095/2010, as well as Directives 2013/36/EU and 2019/1937/EU, was finally published in the Official Journal of the European Union L 150/40 as Regulation no. 2023/1114/EU. Contextually, Regulation 2023/1113/EU, which governs the transfer of funds (including crypto-assets related ones) was published in the OJEU, which applies from 30 December 2024.
MiCAR will enter into force twenty days after its afore-said publication (i.e., on 29 June, next) and will be directly applicable in all EU Member States by 30 December 2024. However, as an exception, provisions on stablecoins, asset-referenced token (“ARTs”) and e-money tokens (“EMTs”) will enter into application on 30 June 2024.
An important role will be played by the implementation process to be led by European Commission, ESMA (European Securities and Markets Authority) and EBA (European Banking Authority).
For the sake of completeness, the International Organization of Securities Commissions (IOSCO) is currently consulting on standards for global crypto regulation that consider crypto to be part of financial services (as also indicated in MiCAR), which is expected to apply from next summer.
The MiCAR proposal was first presented by the European Commission on 24 September 2020, as part of a broader digital finance package aimed at enabling and supporting the further exploitation of the potential of digital finance in terms of innovation and competition, while mitigating the related risks for investors and for the integrity of the EU financial market.
It was hence intended, since its outset, as a development tool for a EU approach that promotes a technological development while ensuring financial stability and consumer protection. The afore-said package hence includes a strategy on digital finance, an act on digital operational resilience (DORA), as well as a proposal on a pilot regime on distributed ledger technology (DLT) for wholesale uses. The package’s ultimate goal is to create an EU framework that enables both the introduction of a crypto-assets market, the tokenisation of traditional financial assets, as well as a wider use of DLT in financial services.
As a result, by the end of 2024, an harmonised regulatory framework for crypto-related products and services will be applicable across the EU, representing the first piece of legislation to govern such markets in a specific (and yet, quite large) world geographical area. In this respect, MiCAR may determine non-EU cypto-assets issuers and service providers to choose EU for starting or expanding their business, thereby turning the introduction of such new legislation into a strategic opportunity for EU.
In brief, MiCAR, which is composed of 149 articles, 119 recitals, and 4 annexes, provides for:
- a definition of, inter alia, crypto-asset, as a “a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology” (see Article 3, paragraph 1(5), of MiCAR);
- transparency and disclosure requirements regarding issuance, public offering and admission to trading of crypto-assets;
- authorisation and supervision requirements to be satisfied by crypto-assets service providers (such as trading venues and wallets where crypto-assets are held), issuers of ARTs and EMTs, as well as for their own operation, organisation and governance;
- requirements for the protection of crypto-asset holders in the issuance, public offering and admission to trading of crypto-assets;
- requirements for the protection of customers of crypto-assets service providers;
- preventive measures against insider trading, unlawful disclosure of insider information and market manipulation with respect to crypto-assets, aimed at ensuring the integrity of the related markets.
Finally, it is worth pointing out that crypto-assets that qualify as financial instruments within the meaning of Directive 2014/65/EU do not fall within the scope of MiCAR, but are governed by EU financial services regulations instead. Likewise, MiCAR does not apply to non-fungible crypto-assets, including digital art and collectibles (such as NFTs), nor to crypto-assets representing unique and non-fungible tangible services or assets, such as product or real estate warranties, as they are not fungible and not easily interchangeable.