Digital finance: agreement on the European regulation on crypto-assets (MiCA)

For the first time, the EU is bringing crypto-assets, crypto-asset issuers and crypto-asset service providers together under a single regulatory framework.

The Council Presidency and the European Parliament have reached a provisional agreement on the proposal on the crypto asset markets (MiCA), which in particular pertains to issuers of unsecured crypto assets and so-called “stablecoins”, as well as trading platforms and wallets where crypto assets are held. This regulatory framework aims to protect investors and maintain financial stability, while enabling innovation and promoting the attractiveness of the crypto asset sector. This will bring more clarity to the European Union, where some member states already have their own legislation regarding crypto assets, but without a specific regime at EU level already in place.

News from this ever-changing sector has confirmed the urgent need for EU-wide regulation. The MiCA regulation will better protect Europeans who have invested in these assets and prevent misuse of crypto assets, while supporting innovation and the attractiveness of the EU. This landmark regulation ends the law of the jungle on crypto assets and reaffirms the EU’s role in setting standards for digital sectors.

Bruno Le Maire, French Minister of Economy, Finance and Industrial and Digital Sovereignty

Regulating the risks associated with crypto assets

The MiCA Regulation will protect consumers against certain risks associated with investing in crypto assets and will help them avoid fraudulent schemes. At present, consumers’ rights to protection or redress are very limited, especially if transactions take place outside the EU. Under the new rules, crypto asset service providers will be required to comply with strict consumer protection requirements and will now be held liable for the loss of investors’ crypto assetsThe MiCA Regulation will also cover cases of market abuse in any type of transaction or service, including market manipulation and insider trading.

In addition, players in the crypto asset market will be required to: provide information about their ecological and climate footprint† The European Securities and Markets Authority (ESMA) will develop draft regulatory technical standards on the content, methods and presentation of information related to the main adverse environmental and climate impacts. Within two years, the European Commission should issue a report on the environmental impact of crypto assets and the introduction of mandatory minimum sustainability standards regarding consensus mechanisms, including proof of work.

To avoid any overlap with the updated legislation on: fight against money laundering, which will now also cover crypto assets, the MiCA regulation does not copy the anti-money laundering provisions enshrined in the money transfer rules agreed on June 29. However, the MiCA Regulation stipulates that the European Banking Authority (EBA) is responsible for keeping a public register of non-compliant crypto asset service providers† Crypto asset service providers whose parent company is located in countries on the EU list of third countries considered to be high risk for money laundering and on the EU list of non-cooperative jurisdictions for tax purposes should have enhanced controls in line with the EU anti-money laundering framework. There may also be stricter requirements for shareholders and management of crypto asset service providers, especially with regard to their location.

A strong framework for so-called “stablecoins” to protect consumers

The latest happenings in the markets of so-called “stablecoins” reiterated the risks investors face in the absence of regulation, as well as the potential impact on other crypto assets.

The MiCA regulation will protect consumers by requiring issuers of stablecoins to build up a sufficient liquid reserve, with a ratio of 1:1 and partly in the form of deposits. Any holder of so-called “stablecoins” can be refunded at any time and free of charge by the issuer, and the rules for operating the reserves will also provide for adequate minimum liquidity. In addition, all stablecoins will be supervised by the European Banking Authority (EBA), with the issuer’s presence in the EU being a prerequisite for any issuance.

The development of tokens referencing one or more assets (asset-referenced tokens or ART) based on a non-European currency used as a means of payment will be restricted in order to preserve our monetary sovereignty. To ensure proper oversight and oversight of public offerings of ARTs, issuers of this type of token must have a seat in the EU

This framework will provide the legal certainty expected by investors and foster innovation within the European Union.

EU-wide rules for crypto-asset service providers and different types of crypto-assets

According to today’s preliminary agreement, crypto asset service providers need permission to operate in the EU† The national authorities must issue the permit within three months. As for the largest crypto asset service providers, national authorities will regularly transmit relevant information to the European Securities and Markets Authority (ESMA).

The non-fungible tokens (NFT)i.e. digital assets that represent real objects such as works of art, music and videos, are excluded from the scope of the MiCA Regulation unless they fall within the existing categories of crypto-assets. Within 18 months, the European Commission will be asked to prepare a full assessment and, if necessary, to assess the need to propose a specific regulatory regime for NFTs and to address the emerging risks of this new market to grab.

Next steps

The provisional agreement must be approved by the Council and the European Parliament before going through the formal approval procedure.


The European Commission presented the MiCA proposal on September 24, 2020. This is part of the broader framework of the digital finance package, which aims to develop a European approach that promotes technological development and ensures stability finance and consumer protection. In addition to the MiCA regulation, this package includes a digital financing strategy, a regulation on the digital operational resilience of the financial sector (DORA) – which also includes providers of crypto asset services – and a proposal for a pilot regime in the field of wholesale. use cases related to Distributed Ledger Technology (DLT).

This package of measures fills a gap in existing EU legislation by ensuring that the current legal framework does not hinder the use of new digital financial instruments. At the same time, it is important to ensure that these new technologies and new products fall within the scope of the financial regulation and operational risk management systems of companies operating in the EU. It is therefore intended to support innovation and the adoption of new financial technologies while ensuring an appropriate level of consumer and investor protection.

The Council adopted its negotiating mandate for the MiCA proposal on 24 November 2021. Trilogues between the co-legislators started on 31 March 2022 and led to today’s provisional agreement.

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