A deeper look into the European Commission’s new cryptocurrency regulations
The European Commission (EC) adopted a comprehensive new Digital Finance Package on September 24, 2020, which will undoubtedly restructure the European economy during the following years. The package intends to reduce risk and ensure the financial stability of the European economy, while enhancing the competitiveness of the continent’s Fintech sector and technology. The Markets in Cryptoassets (MiCA) legislative proposal, which was created to assist simplify distributed ledger technology (DLT) and virtual asset regulation in the European Union (EU) while safeguarding users and investors, is an essential component
of the new regulatory framework.
The lengthy MiCA document focuses heavily on guidelines for crypto-asset kinds that are beyond scope
of currently existing regulations, such as stablecoins, as well as crypto-asset service providers, or CASPs.
MiCA and CASPs
- The MiCA plan was “leaked” early last year, the cryptocurrency industry was made aware of the forthcoming changes to the industry. It is anticipated that it will take up to 4 years for it to be fully enacted into EU law.
- Issuers of stablecoins issuers and CASPs whose market volumes reach “substantial” levels will be subject to responsibilities like a whitepaper and rigorous quality assurance requirements.
- Insisting that “the conditions imposed on crypto asset service providers are proportional to the risks posed by the services provided,” the EC states that it has made an effort to be fair “where relevant”.
Despite this lengthy implementation period, MiCA’s strict compliance requirements will undoubtedly forever transform the European digital asset market.
