European Council adopts ground-breaking MiCA framework and travel rule regime
On 16 May 2023, the Council of the European Union took a significant step in regulating the crypto-assets space by adopting the regulation on Markets in Crypto-Assets (MiCA) and the regulation on information accompanying transfers of funds and certain crypto-assets (the Travel Rule Regulation). This marked the final legislative approval required before publication of MiCA and the Travel Rule Regulation in the Official Journal of the European Union.
MiCA seeks to regulate various aspects of the crypto-asset industry. This includes rules on crypto-asset offerings and admission of crypto-assets into trading platforms, licensing requirements for crypto-asset service providers and rigorous obligations on stablecoin offerings and issuers.
The rules aim to strengthen investor protection, maintain financial stability, ensure that crypto-assets are regulated across the EU on a consistent and harmonised basis and foster innovation and the attractiveness of the EU for the crypto-asset sector.
The Travel Rule Regulation recasts Regulation 2015/847 on information accompanying transfers of fund and extends the application of its rules to transfers of crypto-assets.
The travel rule essentially requires crypto-asset service providers to collect certain information about the sender and beneficiary of the transfers of crypto assets they carry out. This information must, subject to exceptions, be verified by the crypto-asset service provider and, where relevant, transmitted to the crypto-asset service provider of the recipient of the transfer. Unlike transfers of funds, the travel rule applies to all transfers of crypto-assets involving a crypto-asset service provider regardless of the amount transferred.
The press release can be found here.
The new regulation on MiCA can be found here.
Our recent blog posts on MiCA and the travel rule regimes can be found here and here.