Update on the EU’s Markets in Crypto-Assets Regulation

On 24 September 2020 the European Commission released a 168-page proposal (Proposal) for its long-anticipated pan-EU Markets in Cryptoassets (MiCA) Regulation. The MiCA Regulation forms part of the Commission’s Digital Finance Package, setting out new measures designed to support the development of distributed ledger technologies (DLT) in the EU.

Since that time the Proposal, widely expected to become law in the EU in or about 2024, has been doing the rounds of regulators and thinktanks within the EU and further afield, triggering much discussion and reflection along the way. The most notable recent commentary includes the following:

• The European Central Bank (ECB) is deciding whether to launch a ‘digital euro’ in Spring 2021, more on this in our separate blog.
• In France, the Chairman of the AMF has called for centralisation of crypto regulation, ie the MiCA Regulation, under the stewardship of ESMA (5^th Annual Conference on FinTech and Regulation, February 2021).
• In Luxembourg, the CSSF, which initially adopted a conservative stance on virtual currencies, announced on 8 February 2021 the launch of its “Innovation Hub”  aimed at establishing a dialogue with actors of the financial innovation market to develop and apply regulations among other important objectives. The position of the CSSF on the MiCA Regulation is yet to be determined with the regulator said to “actively follow the discussions” (see here).
• In Spain, the Central Bank – despite sending warnings to the market about the peril of investing in bitcoin following Tesla’s latest spending spree – has acknowledged that the MiCA Regulation represents a “negotiation” within Europe on the correct level of regulation in this area (see here).
• In the UK, Brexit means the MiCA Regulation will not be directly applicable, however the UK’s HM treasury has been consulting on a new stablecoin crypto regime for the former member state and is watching the progress surrounding the MiCA Regulation closely (7 January 2021, see here).
• And finally, in Cyprus, CySEC has issued guidance to the market, MiFID firms in particular, on valuation methodologies to be used when dealing in crypto assets implicitly acknowledging the MiCA Regulation’s upcoming role in the EU (Circular C417 of 25 November 2020, see here).

The above confirms that whilst the Proposal may not be law, or indeed even in final form, it has changed the discussion in Europe and beyond to one in which the point of departure for any analysis of crypto regulation now starts with the MiCA Regulation.

We examine this novel (draft) regime in more detail here.