Regulation on Markets in Crypto-Assets (MiCA) and Regulation on information accompanying transfers of funds and certain crypto-assets

On 9 June 2023, both the Markets in Crypto-Assets Regulation (MiCA or MICAR) and the recast Regulation on information accompanying transfers of funds and certain crypto-assets and amending Directive (EU) 2015/849 (TFR) were published in the Official Journal of the European Union.

With MiCA (Regulation (EU) 2023/1114), the European Union is adopting for the first time a harmonised regulatory framework for the crypto-asset market which applies to both traditional institutions of the financial sector and new players emerging in the crypto ecosystem that are engaged in the issuance, offer to the public and admission to trading of crypto-assets or that provide services related to crypto-assets in the EU. These institutions must meet a set of specific requirements to benefit from a regulated status recognised at Union level, thereby permitting the passporting of these services across the EU market.

By adopting MiCA, the EU aims to bring legal certainty to the crypto-asset ecosystem and support innovation while safeguarding consumer protection, markets integrity and financial stability.

MiCA will come into full application from 30 December 2024, except for Titles III and IV (the framework for asset-referenced tokens (ART) and e-money tokens (EMT) issuers) which will apply from 30 June 2024.

For more information, please refer to CSSF website: Markets in Crypto-Assets (MiCA/MiCAR)

The recast Transfer of Funds Regulation (Regulation (EU) 2023/1113) (TFR) complements the implementation of recommendation R.15 from the Financial Action Task Force (FATF) with regard to the money laundering and terrorist financing risks linked to virtual assets, by extending the existing rules on information accompanying the transfers of funds to transfers of crypto-assets (the so-called “travel rule”) within the entire European Union.

The definition of “crypto-asset”1 in the TFR is aligned with MiCA and covers the same categories of crypto assets in scope of MiCA.

The TFR requires crypto-assets transfers carried out with the involvement of a crypto-asset service provider (CASP) having its registered office in the European Union to be accompanied with information on the originators and beneficiaries of those transfers, with the purpose of facilitating the traceability of transfers of crypto-assets and therefore the prevention, detection and investigation of money laundering and terrorist financing. CASPs will be required to obtain, hold and share, in a secure manner, that information with their counterpart on the other end of the crypto-asset transfer, and this in advance of, or simultaneously or concurrently with the transfer and make it available on request to competent authorities.

The TFR will also apply to transfers of crypto-assets executed by means of crypto-ATMs.

The recast Transfer of Funds Regulation will apply from 30 December 2024.

For more information, please refer to CSSF website: Anti-Money Laundering and Countering the Financing of Terrorism (AML/CTF)

1 Ref. art 3 (14) TFR