💶 What is the EU’s crypto regulation MiCA?

Summary of key items:

On 4/20, the EU parliament passed the Markets in Crypto Act (MiCA). The implosions of crypto exchanges in 2022 led to a landslide vote of 517 in favor to 38 against.

📌 The scope includes asset-referenced tokens, e-money tokens, and utility tokens, which are not covered by existing regulations.

📌 A full range of requirements for issuers and service providers around licensing, disclosure, and custody, which will reduce risk for consumers.

📌 No interest can be paid to asset-referenced tokens and e-money tokens. This will limit the deposit supply for a stablecoin issuer and prevent it from acting like a bank.

📌 Also passed was the Transfer of Funds regulation, with a vote of 529 to 29. Any transaction between service providers and individual wallets will be reported for AML purposes.

📌 De-fi is not in scope. One might wonder how you can regulate the computer program. But … the person who operates a de-fi protocol can be identified and possibly deemed as a service provider.

Impact:

Any regulatory clarity is good for industry participants, even though some clauses will limit the crypto activities - for good reasons.

The regulation is expected to become law in 2024.