On the 20th of April 2023, the European Parliament voted on the landmark legislation which will regulate crypto currencies. Originally proposed by the European Commission, the proposed text was agreed upon on October 2022. Now after several rounds of negotiations and debates, the regulation on Markets in Crypto Assets (“MiCA”) has been approved by the legislative body of the European Union (“EU“). MiCA will be directly enforceable throughout all the 27 Member States of the EU, creating a harmonised law throughout the bloc. This vote is a step towards ending what has been referred to “the crypto wild west”.
With the voting in of this historic regulation, the EU is the first major jurisdiction to legislate on the topic of crypto currencies. Stefan Berger, the lawmaker who was at the forefront of the negotiations stated that this places the EU “at the forefront of the token economy.” Following the collapse of FTX at the end of the year 2022, MiCA comes at the opportune time to rebuild trust in the crypto asset market.
The law is applicable to those persons who are engaged in the issuance of crypto assets and the provision of crypto assets services. These persons shall be known as crypto-asset service providers or CASPs and they will need authorisation from the national authority to provide such services. CASPs will also need to publish a whitepaper describing the crypto assets which will be offered. The regulation identifies three types of crypto assets, these being Asset Referenced Tokens, Electronic Money Tokens and other crypto tokens, such as the Utility Token.
Malta already has experience with crypto assets since in 2018, the Virtual Financial Assets Act introduced these assets to the Maltese financial system. The new Regulation will be applicable, among other entities, to those who under the Maltese regime are currently known as Virtual Asset Service Providers.
MiCA will not immediately be coming into effect and is expected to take between 12 to 18 months to become fully enforceable.
For more information on MiCA and its regulatory implications, free to contact us.