On 30 June 2022, the EU reached a provisional agreement on the landmark markets in cryptoassets (MiCA) regulation. This is a significant milestone for the future direction and structure of cryptoasset regulation in Europe.
MiCA sets out a comprehensive regulatory framework for a number of cryptoassets which currently fall outside the scope of EU regulation, such as certain unbacked cryptoassets and stablecoins. It captures cryptoasset issuers, as well as service providers, including trading venues and wallet providers.
The new requirements promote consumer protection, while also addressing other concerns relating to market abuse, financial stability issues as well as the environmental and climate impact of certain cryptoasset-related activities.
Notably, MiCA introduces a new authorisation regime for crypto-asset service providers who operate in the EU. It also establishes liquidity requirements for stablecoin issuers, including the obligation to put in place a ‘sufficiently liquid reserve’ (of a 1:1 ratio) in respect of stablecoin issuances.
The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) will be responsible for the supervision of the new regime at EU-wide level.
The provisional agreement is subject to approval by the Council and the European Parliament before going through the final stages of the legislative process.
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