With the Regulation on Markets in Crypto-Assets (“MiCA” or “MiCAR”), 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. These entities must meet a set of specific requirements to benefit from a regulated status recognised at European level.

MiCA

MiCA (Regulation of the European Parliament and of the Council on Markets in Crypto-assets, and amending Regulations (EU) No 1093/2010 and (EU) No 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937) is part of the Digital Finance Package published by the European Commission on 24 September 2020 which includes other regulatory initiatives such as the Pilot Regime for market infrastructures based on distributed ledger technology (Regulation (EU) 2022/858) and DORA (Regulation (EU) 2022/2554).

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.
To this end, the EU establishes a harmonised framework for the issuance, offer to the public, admission to trading and provision of services related to crypto-assets in the Union.

MiCA creates a bespoke regime for crypto-assets that are not already covered in European financial services legislation and groups them into three main categories: asset-referenced tokens (“ART”), e-money tokens (“EMT”), and other crypto-assets.

The extent of the requirements to which issuers of crypto-assets are subject depends on this classification. For example, all tokens require the notification of a white paper, whilst only ART and EMT issuers require prior approval.

Crypto-asset service providers (“CASP”) are subject to an authorisation regime involving notably prudential and organisational requirements and consequently will be subject to a supervisory regime by the CSSF. Certain categories of entities that already have a regulated status (e.g. credit institutions, investment firms) can provide certain services on crypto-assets upon a simple notification.

The types of services that fall under the scope of MiCA are:

  • Custody and administration of crypto-assets on behalf of clients,
  • Operation of a trading platform for crypto-assets,
  • Exchange of crypto-assets for funds,
  • Exchange of crypto-assets for other crypto-assets,
  • Execution of orders for crypto-assets on behalf of clients,
  • Placement of crypto-assets,
  • Reception and transmission of orders for crypto-assets on behalf of clients,
  • Provision of advice on crypto-assets,
  • Portfolio management on crypto-assets,
  • Transfer services for crypto-assets on behalf of clients.

MiCA will apply:

  • 12 months after its entry into force regarding the provisions relating to the authorisation and supervision of ART/EMT,
  • 18 months after its entry into force for the rest of the provisions, in particular on CASP.

The CSSF is closely following the final steps of the adoption of MiCA and will keep the financial sector informed of the practical implications including the procedures resulting from the regulation.

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