Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets, and amending Regulations (EU) No 1093/2010 and (EU) No 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937 (Text with EEA relevance)

The new Markets in Crypto-Assets Regulation (MiCA) was finally published in the Official Journal (OJ) of the EU, following months and years of consultation and refinement. MiCA sets out a regulatory framework for crypto-assets, crypto issuers, and crypto service providers in an effort to regulate these new „financial instruments“ and parties issuing, offering, dealing, brokering, or trading such. The ultimate objective is to enhance investor protection and ensure financial market stability, while fostering innovation and promoting the attractiveness of the crypto industry.
As MiCA is a comprehensive new regulation, the following brief summary reflects only some key provisions of the legislation. Details may be reviewed by referring to the original legal text.
The new regulation applies to any ‘crypto-asset’ which is a digital representation of „a value or of a right that may be transferred and stored electronically using distributed ledger technology or similar technology“ including e-money tokens, asset-referenced tokens, and digital representations that are neither of the two. Currently, it does NOT apply to non-fungible tokens.
#### MiCA
(1) sets out disclosure and transparency requirements for the „issuance, public offering, and trading of crypto-assets on a crypto-asset trading platform“ (admission rules). These requirements include, for instance, the obligation to draw up a crypto-asset white paper which briefly summarizes the key aspects of the offer, the obligation to disclose adequate marketing material – adequate meaning „fair, clear and not misleading“, or the obligation to provide adequate safeguarding of the assets and thus of customer funds.
(2) establishes a framework for the authorization of crypto-asset service providers, issuers of asset-referenced tokens, and issuers of e-money tokens. It thereby outlines the content and form of an application for authorization, sets out the documents that need to be furnished in this context (e.g. beforementioned whitepapers, proof of competence, besides the typical information such as LEI, name, address, etc.), and otherwise describes the entire application and authorization process.
(3) sets out which regulatory authority will be responsible for the supervision, including the authorization, of crypto-asset service providers, issuers of asset-referenced tokens, and issuers of e-money tokens.
(4) defines operational, organizational, and governance requirements of trading platforms and service providers, including prudential requirements, requirements as to the safeguarding of client assets and funds, requirements pertaining to the „fitness“ of the management body and staff members, obligations relating to continuity planning and the drawing of recovery plans, obligations pertaining to complaints handling, and many others.
(5) implements requirements on trading platforms and service providers „to protect holders of crypto-assets during the issuance, public offering, and trading processes“. These requirements are quite similar to those under MiFID II in that they require, for instance, the application of customer due diligence to prevent money laundering and the financing of terrorism or the adherence to stringent trading obligations (fair, non-discriminatory).
(6) establishes a framework for enforcement, e.g. by granting temporary intervention powers to the European Banking Authority (EBA) to prohibit or restrict the issuance, offering, sale, or trading of crypto-assets, or by granting local competent authorities with the power to issue product intervention orders. It also sets out exact maximum penalties for defined violations that may be imposed by local competent authorities. In this context, the regulation further implements new measures to prevent market manipulation and insider trading in order to ensure the integrity of markets in crypto-assets.
To conclude, it may be noted that MiCA also sets the framework for developing a register of crypto-asset service providers, issuers of asset-referenced tokens, and issuers of e-money tokens which will be maintained by ESMA, the European Securities and Markets Authority and made publicly available for reference and verification purposes.