First look at the proposed EU regulation on markets in crypto-assets (MiCA)
The European Union seems to have progressed rapidly and is at advanced stages promising a complete digital finance regulatory framework soon. This framework aims to “further enable and support the potential of digital finance in terms of innovation and competition while mitigating the risks”.
The proposed draft of this regulation, which is available here has been leaked. Sven Giegold, a German politician and current member of the European Parliament, has confirmed this on his personal blog, accessible here.
Recently, the President of the European Commission, Ursula von der Leyen, has stressed the need for “a common approach with member states on cryptocurrencies to ensure we understand how to make the most of the opportunities they create and address the new risks they may pose.”
A quick look at “The Proposal for A Regulation of the European Parliament and of the Council on Markets in Crypto-Assets (MiCA’)”, indicates that well needed changes relating crypto-assets are near. The proposal establishes four main objectives, namely:
- Providing legal certainty;
- Offering support and encouragement whilst promoting innovation and development;
- Encourage more consumers and investors to part-take in this market; and
- Ensuring financial stability.
To implement these objectives the proposed draft aims to establish a clear legal framework which plans to regulate all crypto-assets which are not included in current established legislation pertaining to traditional financial services. The success of this framework can only be achieved if appropriate measures and safeguards are effectively put into place, while recognizing that crypto-assets are constantly developing and evolving. The draft specifically addresses ‘stablecoins’ which are said to have “great potential” in becoming more widely accepted. This proposal indicates safeguards in order to address potential risks. Finally, the proposal also refers to potential passportability of authorisations.