Understanding MiCA: EU market rules for crypto-assets

In September’s TGS Legal Interest Group meeting, Jean-Philippe Tueni briefed members on developments relating to the uniform regulation of crypto-assets in Europe commonly known as MiCA.

There are roughly 9,000 active cryptocurrencies with more than 300 million cryptocurrency users across the globe.

Approximately 18,000 businesses now accept a form of crypto as payment and governments are increasingly feeling the need to regain control over this growing market.  In accordance with a policy to promote digital transition, the European Commission adopted the MiCA regulation proposal on September, 24th2020.

EU Member States need to implement MiCA within the next ten months

In taking the decision not to go down the voluntary self-regulation route, the Commission has opted for a policy of harmonization in April 2023 which effectively means Member States need to implement MiCA within the next ten months.

The purpose of the legislation is to provide more legal certainty, especially when dealing with crypto-assets; to support innovation and fair competition; to instill consumer and investor protection; to prevent money laundering and terrorist financing and to require crypto-assets to declare information on their environmental and climate footprint. 

Potential issues to be aware of in MiCA implementation

Jean-Philippe drew the group’s attention to several potential issues: the classification of crypto-assets is at odds with previous EU guidelines because crypto-assets are commonly classified between crypto-currency or payment tokens, utility tokens and security tokens. 

Furthermore, MiCA doesn’t address NFTs and some members of the EU Parliament are proposing amendments to include them in an updated version of the regulation.

Get ready for MiCA 2

MiCA is only part of EU legislation in general, and should be applied with the other EU rules, especially GDPR.  Further developments are expected and it is likely a MiCA 2 will be drafted.

Jean-Philippe Tueni at TGS.

Partner and Attorney-at-law specializing in corporate law and mergers and acquisitions