Markets in Crypto-Assets Regulation
The Markets in Crypto-Assets Regulation (MiCAR) is a key component of the European Union's Digital Finance Package, introduced in September 2020, with the goal of fostering technological innovation and creating a unified regulatory framework for the EU's cryptocurrency sector.
Following about two years of consultations, MiCAR was agreed upon by EU institutions and officially adopted by the European Council on May 16, 2023. As a regulation, MiCAR automatically applies to the national laws of EU member states without requiring separate legislative implementation. MiCAR comprehensively addresses aspects of the cryptocurrency market, encompassing investor protection, transparency, anti-money laundering measures, and safeguards against market abuse, aligning with established regulations in the traditional European financial market.
To accomplish its objectives, MiCAR is applicable to both individuals and entities engaged in issuing, offering, or providing services related to crypto assets in the EU, covering activities in both the primary and secondary markets, known as "Crypto Asset Services."
It's crucial to highlight that MiCAR extends its scope to entities already authorized under national law, categorizing them as Crypto Asset Service Providers (CASPs). The term CASP is also adopted in the revised EU Money Transfer Regulation EU 2015/847, aligning nomenclature with MiCAR and departing from the Financial Action Task Force's previous term, "Virtual Asset Service Providers (VASPs)."
As a result, MiCAR significantly impacts various participants, including issuers, traders, brokers, custodians, and financial institutions offering services related to crypto assets.
MiCAR became effective on June 29, 2023, following its publication in the Official Journal of the European Union, taking effect 20 days thereafter.
As a regulation, MiCAR automatically applies in all EU member states without the need for national implementation, ensuring a consistent regulatory framework across the EU in the crypto ecosystem.
The general application of MiCAR is set to commence on December 30, 2024, while Titles III and IV, pertaining to obligations related to the issuance of Asset-Reference Tokens (ARTs) and Electronic Money Tokens (EMTs), deviate from this timeline, applying from June 30, 2024.
The requirements for crypto-assets under MiCAR are divided into three main categories:
MiCAR mandates collaboration between ESMA and the EBA to develop Regulatory Technical Standards (RTS), Implementing Technical Standards (ITS), and Guidelines. Two consultation packages from ESMA were released in July 2023 and October 2023 and several documents also from EBA. ESMA is expected to submit these technical standards to the European Commission by June 30, 2024.
A key provision in MiCAR necessitates the creation, notification, and publication of a crypto-asset white paper for specific types of crypto-assets like asset-referenced tokens and e-money tokens. This document includes mandatory disclosures, offering general information about the issuer, offeror, or entity seeking admission to trading.
The white paper covers details about the project funded, the public offering or admission to trading of crypto-assets, the associated rights and obligations, the underlying technology, and related risks. It is generally mandatory to prepare, notify, and publish a crypto-asset white paper before publicly offering or seeking admission to trading for such assets.
ESMA already provided materials on the White Papers PoC and the EBA drafted a first template sets for transmission in XHTML/iXBRL format (like ESEF or CSRD/ESRS).
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