The European Union’s New Crypto Rules (MiCA) Are Here. What’s Next?
The European Union (EU)’s Markets in Crypto Assets (MiCA) regulation is currently being proposed by EU institutions. If and when it comes into effect, it will provide a unified licensing regime for crypto asset service providers (CASPs) operating in the EU.
The EU is still finessing the details and observers offer varying estimates on when and in what manner the regulators will launch the new rules. The European Commission committed to implementing MiCA within four years of September 2020. While there is a non-zero chance (and high hopes) of MiCA becoming law sooner, even as early as this year or sometime in 2023, the Commission gave itself until 2024 to get this done.
Where is MiCA in the Legislative Process?
The short answer is, mostly complete.
The ordinary legislative procedure for most EU rules involves a proposal submitted by the European Commission to the European Parliament and European Council. Both must agree on the text for it to become law, so the text is reviewed and amended multiple times until this happens. For context, MiCA was conceptualized in the Digital Finance Package presented by the European Commission on September 24, 2020. Despite broad support, it was not until June 30, 2022 that the Council and Parliament reached a “provisional agreement” on the text.
Once the parties agree, the Council and Parliament need to formally “approve” the draft, and then individual member states need to have their parliaments sign off on it. Once that happens, MiCA will come into effect. We can expect some changes in the text, but drastic shifts are unlikely. Having every member state sign off through its legislative process will undoubtedly take time.
What do we know about MiCA?
We still do not have MiCA’s draft text, since it is still in the draft phase. What we do know is based on press releases, statements by EU members of parliament, and industry reports. Before it becomes law, compromises will be struck, deals will be made, and as with all regulatory matters, the devil will be in the details. But, and this cannot be stressed enough—MiCA will bring much needed clarity to the regulatory framework governing crypto assets, both in the EU and worldwide.