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MiCA EU Regulation

The Markets in Crypto-Assets Regulation (MiCA) is EU regulation that establishes uniform rules for crypto-assets across the European Union.

MiCA is a comprehensive regulation that aims to provide a clear and consistent approach to regulating crypto-assets across the EU, protecting consumers and investors while fostering innovation and growth in the sector.

Advisors​

Objectives​

Key aspects of MiCA:

  • Scope: MiCA covers crypto-assets that are not currently regulated by existing financial services legislation.
  • Objectives: The regulation aims to support market integrity and financial stability by regulating public offers of crypto-assets and ensuring consumers are better informed about the associated risks.
  • Key provisions: MiCA includes provisions for those issuing and trading crypto-assets, including asset-reference tokens and e-money tokens. These provisions cover:
    • Transparency
    • Disclosure
    • Authorization
    • Supervision of transactions
  • Legal framework: MiCA establishes a new legal framework that will support market integrity and financial stability in the crypto-asset market

Impact​

Potential impact on venture capital:

  • Venture capital funds will be able to fund crypto developers under the MiCA framework. This could spur more VC investment in crypto/blockchain startups.
  • The increased legal certainty and harmonized rules across the EU under MiCA may boost confidence and help the development of crypto projects seeking venture funding.
  • However, the extensive compliance requirements under MiCA could increase costs for crypto startups, which may be passed on to VC investors. This could hinder access to venture capital.
  • MiCA introduces disclosure requirements like publishing white papers for token offerings. While increasing transparency for investors, this means more regulatory hurdles for crypto startups to raise VC.

Timeline​

Timeline for MiCA implementation:

  • MiCA officially enters into force on June 29, 2023, 20 days after its publication in the Official Journal of the European Union.
  • By June 30, 2024, regulations for asset-referenced tokens (ARTs) and e-money tokens (EMTs) will take effect.
  • The rest of the MiCA rules, including those for crypto-asset service providers (CASPs), will fully apply from December 30, 2024.
  • Transitional provisions allow some CASPs already operating under national laws to continue until July 1, 2026 or until their MiCA license is approved/denied.

Issues​