Markets in crypto-assets (MICA) | EU framework

The mica regulation

On 9 June 2023, Regulation (EU) 2023/1114 of 31 May 2023 on markets in crypto-assets was published in the Official Journal of the EU (the “MiCA Regulation”), thus establishing a harmonised regulatory framework for the crypto-assets market within the EU.

The MiCA Regulation aims to protect investors, preserve financial stability and market integrity whilst still supporting innovation in the crypto-asset sector.

The MiCA Regulation will apply to a wide range of crypto-assets, which will include cryptocurrencies such as bitcoin and utility tokens, which are intended to provide access to goods or services. Certain crypto-assets which aim to retain a stable value will also be in scope of the MiCA Regulation, including e-money tokens and asset referenced tokens.

The key provisions of the MiCA Regulation which apply to those persons who issue and trade crypto-assets, deal with transparency, authorisation and supervision of transactions, as well as disclosure. In addition to this, the MiCA Regulation will implement measures which target market manipulation and prevent money laundering, terrorist financing and other unlawful activities. The key provisions of the MiCA Regulation are discussed in more detail in our previous article on this matter.

The MiCA Regulation entered into force on 29 June 2023; the provisions relating to asset-referenced tokens and e-money tokens will apply 12 months thereafter whereas all other provisions (including those related to crypto-asset service providers) will apply 18 months thereafter.

The travel rule

In addition to the MiCA Regulation, Regulation (EU) 2023/1113 of 31 May 2023 on information accompanying transfers of funds and certain crypto-assets was also published in the Official Journal of the EU on 9 June 2023 (the “Travel Rule Regulation”). The Travel Rule Regulation sets forth rules on the information on payers and payees accompanying the transfer of funds and on the information on originators and beneficiaries accompanying the transfer of crypto-assets. The purpose of these rules is to prevent, detect and investigate money laundering and terrorist financing. These rules apply where at least one of the payment service providers or the crypto-asset service providers involved in the transfer is established or has its registered office in the EU.

The Travel Rule Regulation entered into force on 29 June 2023 and will apply from December 2024.