The Paris Blockchain Week 2023 is being conducted from March 20 to March 24, 2023. A panel titled ‘MiCA: How is the EU Regulating Crypto?’ had extensive discussions over the proposed MiCA regulation which is expected to take effect in 2024. A wide range of implications and potential repercussions of the European Union’s Markets in Crypto-Assets (MiCA) law have been raised by regulators and industry participants during the week.
MiCA is a 400-page long document set to be the new EU regulation concerning any activity around crypto and crypto assets. It is intended to cover areas related to Transparency, disclosure, authorisation and supervision of crypto-asset service providers and issuers, and transactions. While it is not likely to go into effect until early 2024, MiCA seeks to safeguard customers and investors, boost financial stability in the market, and not stifle innovation in the crypto and Web3 arena.
Gundars Ostrovskis, a team leader in the Digital Finance Unit of the European Commission, spoke about the development of MiCA. “We clearly expect it to be helpful in terms of strengthening the industry by giving regulatory certainty, this is one of the things that are important for business’s strategic planning, and protecting customers of the industry while ensuring market integrity.”
MiCA has been in the works for a few years, involving discussions with multiple countries and industry partners. According to the most recent agenda posted on the website of the European Union’s parliament, MiCA will be debated in the parliament on April 18. This meeting is intended to be the regulation’s final official agreement. This decision comes after a lengthy period of postponement.
On October 10 2022, MiCA was first approved with a landslide victory of 28 votes in favour with a sole opposing vote. A full vote was initially planned at the end of the respective year but kept getting delayed due to translational issues. The new hearing was supposed to be scheduled for February 2023. In January, it was announced that the vote is being pushed till April due to technical issues. On March 20, it was finally declared that the vote shall take place on April 18.
According to Janet Ho, Chainalysis’s head of EU policy, the success of MiCA will be determined by a number of things. Ho proposed that the European Commission review the enactment of demands, taking into account input from government supervisors and industry participants, as well as the early impact of MiCA. An in-depth knowledge of the legislation’s requirements, as well as rigorous criticism and revision of particular elements of the documentation, are required.
“Legislation is not a static process. There’s not always a perfect piece of regulation. We know there will be reviews and improvements.”
Concerns regarding the impact of MiCA on existing crypto and Web3 rules in particular in European Union nations were also raised. Nonfungible tokens (NFTs) and decentralised finance (DeFi) products and platforms that are not yet listed in the MiCA documentation may continue to come under the scope of country-specific regulations. This leaves no room for local governance in the digital market.
The document is undergoing translations into all 24 of Europe’s official languages. Crypto and the digital market have received hot and cold responses from European officials. With the final voting dates hopefully fixed, it is awaited to see how MiCA affects the European crypto market.