Navigating Markets in Crypto-Assets Regulation (MiCA) - Overview

With a population of nearly 450 million people and combined GDP of almost EUR 15 trillion, the EU sits alongside the United States as one of the wealthiest markets in the world.

Against this backdrop, ever since the initial coin offering (ICO) boom in 2017, European investors were heavily targeted by the issuers and promoters of crypto-assets from around the globe who sought to gain access to the lucrative European market. However, the EU was lacking a harmonized regulatory framework on crypto-assets and in this absence of a common approach to this topic at the EU level, individual Member States have been trying to create national frameworks that would address the gaps in regulation and supervision of this rapidly evolving industry in their respective jurisdictions.

In this process, some jurisdictions like Malta have used the opportunity to position themselves as crypto-friendly jurisdictions, some have only applied AML/CTF registration regime to crypto-companies (like Ireland) while some others like Germany, have been expanding the scope of application of the existing financial services regulations to entities engaging in the provision of crypto-asset related activities.

With the aim of bridging these divergences in national frameworks, the EU Commission has proposed MiCA as part of its Digital Finance Package in September 2020. Aimed to become a cornerstone of regulation of crypto-asset, MiCA introduces a harmonized set of rules that aims to create a level playing field for issuers of crypto-assets and crypto asset service providers operating within the Union that shall enable them to explore the full potential of the EU Single Market.

On 20th of April 2023, the EU Parliament has finally adopted the final text of MiCA paving the way for the EU to become the first major jurisdiction with the comprehensive regulatory framework on crypto-assets.

In our three-part series “Navigating MiCA” our experts Dr. Verena Ritter-Döring (Partner, Frankfurt) and Miroslav Đurić LL.M. (Associate, Frankfurt) provide an overview of the new framework, key regulatory requirements applying to offerors of crypto-assets and the new authorization regime applying to crypto-asset service providers regulated under MiCA.