📢#MiCA is complete!
The landmark #crypto regulation sets out uniform 🇪🇺 requirements for offerors of #cryptoassets and service providers (#CASPs) to apply for authorisation in the Single Market.
👀🧵for a full dive on #MiCA and what it means for the #cryptoindustry.
1/22
The landmark #crypto regulation sets out uniform 🇪🇺 requirements for offerors of #cryptoassets and service providers (#CASPs) to apply for authorisation in the Single Market.
👀🧵for a full dive on #MiCA and what it means for the #cryptoindustry.
1/22
Even though a better agreement was close last week, 🇫🇷 vetoed it during the 🇪🇺 MS intervention period & raised concerns on USD-denominated #stablecoins used as a "means of #exchange", suggesting a return to their restriction when used for #settlement purposes ❗️
2/22
2/22
The compromise was to at least clarify that USD-#stablecoins used for spot #trading would NOT be captured.
The final text was approval by #COREPER yesterday and @EP_Economics will do it on 10/10. Final adoption by Ministers and the Parliament’s Plenary will be end of Oct.
3/22
The final text was approval by #COREPER yesterday and @EP_Economics will do it on 10/10. Final adoption by Ministers and the Parliament’s Plenary will be end of Oct.
3/22
▶️SCOPE
126 articles cover:
-#MiCA scope and definitions
-Offering, marketing of #cryptoassets
-Issuance of #stablecoins and #emoney tokens
-Authorisation, operating conditions for #CASPs
-Prevention of market abuse
-Role of competent authorities, @EBA_News, @ESMAComms.
4/22
126 articles cover:
-#MiCA scope and definitions
-Offering, marketing of #cryptoassets
-Issuance of #stablecoins and #emoney tokens
-Authorisation, operating conditions for #CASPs
-Prevention of market abuse
-Role of competent authorities, @EBA_News, @ESMAComms.
4/22
▶️ASSETS TAXONOMY
-#MiCA taxonomy distinguishes between #cryptoassets, asset-referenced tokens (#ARTs) & #emoney tokens (#EMTs).
-#Cryptoasset: "a digital representation of value or rights which may be transferred & stored electronically, using #DLT or similar tech".
5/22
-#MiCA taxonomy distinguishes between #cryptoassets, asset-referenced tokens (#ARTs) & #emoney tokens (#EMTs).
-#Cryptoasset: "a digital representation of value or rights which may be transferred & stored electronically, using #DLT or similar tech".
5/22
-#ARTs and #EMTs categorised as "regular" and "significant"; the latter are subject to stricter rules.
🔹A #token is significant if 3 criteria are met:
-Customer base size >2m
-Market cap or #reserve assets >EUR 1bn
-At least 500k transactions/day
-Operating in >7 🇪🇺 MS.
6/22
🔹A #token is significant if 3 criteria are met:
-Customer base size >2m
-Market cap or #reserve assets >EUR 1bn
-At least 500k transactions/day
-Operating in >7 🇪🇺 MS.
6/22
▶️RULES FOR OFFERORS OF #CRYPTOASSETS
-Detailed #whitepaper: info on the project, the offeror, risks, environmental impact of #DLT.
-Acting professionally: avoiding misleading comms, preventing conflicts of interest, acting in the best interest of #holders.
7/22
-Detailed #whitepaper: info on the project, the offeror, risks, environmental impact of #DLT.
-Acting professionally: avoiding misleading comms, preventing conflicts of interest, acting in the best interest of #holders.
7/22
-Maintaining an 🇪🇺 standard of systems and #security access protocols
-Effective safeguards for funds raised during an offering
-Refunds for cancelled offerings of #cryptoassets
-Identifiable, fair and non-misleading marketing comms
8/22
-Effective safeguards for funds raised during an offering
-Refunds for cancelled offerings of #cryptoassets
-Identifiable, fair and non-misleading marketing comms
8/22
▶️RULES FOR SIGNIFICANT #ARTs
-Detailed #WhitePaper, governance arrangements, orderly wind-down
-Establishing a legal entity in 🇪🇺
-#OwnFunds: > EUR 350k or 3% of the avg reserve assets amount
-Reserve should be segregated from issuer's own assets.
-Interoperability rules
9/22
-Detailed #WhitePaper, governance arrangements, orderly wind-down
-Establishing a legal entity in 🇪🇺
-#OwnFunds: > EUR 350k or 3% of the avg reserve assets amount
-Reserve should be segregated from issuer's own assets.
-Interoperability rules
9/22
▶️RULES FOR SIGNIFICANT #EMTs
-Detailed #Whitepaper
-Authorisation as #emoney institution under E-Money Directive
-Requirement for #EMTs to be issued and redeemed at par value
-Prohibited granting of interests to holders of #EMTs
-Equivalent rules as for significant #ARTs
10/22
-Detailed #Whitepaper
-Authorisation as #emoney institution under E-Money Directive
-Requirement for #EMTs to be issued and redeemed at par value
-Prohibited granting of interests to holders of #EMTs
-Equivalent rules as for significant #ARTs
10/22
▶️RULES FOR #CASPs
-To act fairly, in interest of clients
-#Prudential & organisational requirements
-Safekeeping of clients' assets & #funds
-Complaint handling procedures
-Preventing, managing conflicts of interest
-#Outsourcing requirements
-Orderly wind-down reqs
11/22
-To act fairly, in interest of clients
-#Prudential & organisational requirements
-Safekeeping of clients' assets & #funds
-Complaint handling procedures
-Preventing, managing conflicts of interest
-#Outsourcing requirements
-Orderly wind-down reqs
11/22
▶️REQS FOR CUSTODY, ADMINISTRATION OF CRYPTOASSETS (CAs)
-Entering into agreement with clients, defining duties, responsibilities
-Register of positions
-Established #custody policy
-Segregated holdings
-Liability for loss of clients' CAs due to malfunctions, cyberattacks
12/22
-Entering into agreement with clients, defining duties, responsibilities
-Register of positions
-Established #custody policy
-Segregated holdings
-Liability for loss of clients' CAs due to malfunctions, cyberattacks
12/22
▶️#CASP RULES FOR TRADING #PLATFORMS
-Developed operating rules
-Effective procedures & arrangements to ensure resilience of #trading system
-Publicly available bid & ask prices + extra info
-Final settlement of a #crypto transaction on #DLT initiated within 24hrs
13/22
-Developed operating rules
-Effective procedures & arrangements to ensure resilience of #trading system
-Publicly available bid & ask prices + extra info
-Final settlement of a #crypto transaction on #DLT initiated within 24hrs
13/22
▶️EXCHANGE OF #CRYPTOASSETS (CAs) AGAINST FUNDS OR OTHER CAs:
-Non-discriminatory commercial policy
-Firm #price of CAs published
-Executing clients' orders at prices displayed at time of their receipt
-Publishing details of #transactions concluded (volumes, prices)
14/22
-Non-discriminatory commercial policy
-Firm #price of CAs published
-Executing clients' orders at prices displayed at time of their receipt
-Publishing details of #transactions concluded (volumes, prices)
14/22
▶️OTHER REQUIREMENTS
#MiCA also covers obligations in cases of:
-Execution of orders for #cryptoassets on behalf of clients
-Placement of cryptoassets
-Reception and transmission of #orders related to cryptoassets
-Advice on cryptoassets and #portfolio management.
15/22
#MiCA also covers obligations in cases of:
-Execution of orders for #cryptoassets on behalf of clients
-Placement of cryptoassets
-Reception and transmission of #orders related to cryptoassets
-Advice on cryptoassets and #portfolio management.
15/22
⏳Timeline:
-Ratification & publication in 🇪🇺Official Journal by Q1 2023
-Entry into force: 20 days later
▶️Application of rules for #stablecoins (title III and IV): Q1 2024
⏩Full application: Q3 2024
16/22
-Ratification & publication in 🇪🇺Official Journal by Q1 2023
-Entry into force: 20 days later
▶️Application of rules for #stablecoins (title III and IV): Q1 2024
⏩Full application: Q3 2024
16/22
▶️TRANSITIONAL PERIOD:
-#CASPs which provided services in accordance with law before #MiCA, may continue to do so for other 18 months after the date of application.
-Issuers of #ARTs may continue until they are granted an authorisation.
17/22
-#CASPs which provided services in accordance with law before #MiCA, may continue to do so for other 18 months after the date of application.
-Issuers of #ARTs may continue until they are granted an authorisation.
17/22
Issues to be clarified in Level 2❓
1. NFTs🖼️
Article 2(2a) + recital 6b state that #NFTs are out of scope
BUT
Recital 6c gives unclear definition of what is considered "non-fungible", stating that tokens issued in a "large #collection" (how large?) may be fungible.
18/22
1. NFTs🖼️
Article 2(2a) + recital 6b state that #NFTs are out of scope
BUT
Recital 6c gives unclear definition of what is considered "non-fungible", stating that tokens issued in a "large #collection" (how large?) may be fungible.
18/22
▶️2. USD DENOMINATED #STABLECOINS/1
#ARTs and #EMTs denominated in non-EU #currencies have limitations when used as “means of exchange”.
This approach has been pushed by Member States to preserve the #monetarysovereignty of the EU & the role of the Euro
19/22
#ARTs and #EMTs denominated in non-EU #currencies have limitations when used as “means of exchange”.
This approach has been pushed by Member States to preserve the #monetarysovereignty of the EU & the role of the Euro
19/22
▶️USD DENOMINATED STABLECOINS/2
After some uncertainty, now we know that:
✅USD-stablecoins used for spot #trading will NOT be captured by the limits
❌USD-stablecoins used by smaller #CEXs as means of #settlement for transactions between crypto-assets WILL be capped
20/22
After some uncertainty, now we know that:
✅USD-stablecoins used for spot #trading will NOT be captured by the limits
❌USD-stablecoins used by smaller #CEXs as means of #settlement for transactions between crypto-assets WILL be capped
20/22
▶️3. UNDERTAKINGS/DEFI
Recital 12a clarifies that #DeFi arrangements and other #decentralised entities remain out of scope of MiCA.
The notion of “#undertaking” was introduced to include specific economic arrangements recognised under the some Member States' laws.
21/22
Recital 12a clarifies that #DeFi arrangements and other #decentralised entities remain out of scope of MiCA.
The notion of “#undertaking” was introduced to include specific economic arrangements recognised under the some Member States' laws.
21/22
Overall:
✅#MiCA brings legal clarity & harmonisation in 🇪🇺
✅Is technology-neutral & risk-based, as it treats diff types of #cryptoassets and issuers depending on their risk
❌Some areas need #clarification through separate delegated acts: the "Level 2" legislation.
22/end
✅#MiCA brings legal clarity & harmonisation in 🇪🇺
✅Is technology-neutral & risk-based, as it treats diff types of #cryptoassets and issuers depending on their risk
❌Some areas need #clarification through separate delegated acts: the "Level 2" legislation.
22/end
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