Crypto Regulation: Some More Changes to the MiCa Act?

The MiCa law is eagerly awaited by the crypto sphere, which finally wants to know which sauce is going to be eaten. However, no decision has yet been made on the regulations.

Despite an “agreement”, many hesitations

Is the MiCa Act really ready to come out of the oven? It seems not. Although the European Parliament met on June 30 to reach an agreement, some hesitations remain. On the occasion of the Paris Blockchain Week Summit, the President of the French Federation of Blockchain Professionals Rémy Ozcan brought together three experts to talk about it. John Ho, Legal Manager at Standard Chartered Bank, Joana Neto, Anti-Money Laundering Data Specialist for the European Banking Authority and Dimitrios Psarakis, Head of European Affairs and Financial Strategy for XReg Consulting, discussed the latest regulatory developments.

Rémy Ozcan, Dimitrios Psarakis, Joana Neto and John Ho at the Blockchain Summit in Paris

For the time being, the MiCa law remains clear: every transaction will have to be recorded and tracked. As for service providers, they must be duly registered with authorities such as the AMF. In practice, however, the supervision recommended by the texts is difficult to achieve. The elements or documents to be verified have not yet been decided. It is also unclear which body will oversee the regulation.

It is not yet known who will supervise. In any case, it’s not decided yet. Monitoring can be done on three levels, in order of probability. First, we could very simply ask the authorities of each country to check whether the law is being followed in their territory. They will have to do what is necessary in the event of a dispute. In a second step, the European Banking Authority could intervene for certain tokens. Finally, ESMA (European Securities and Markets Authority) should also play a global supervisory role. However, it is more likely that she does not have a direct view of crypto.

Excerpt from Joana Neto’s Speech at the Blockchain Summit in Paris

The MiCa Act focuses on the protection of users

In spite of everything, the protection of the user remains a priority when writing the text. The crypto winter arguably weighed on the balance sheet to force lawmakers to contain future crises. According to the experts present at the conference, hard work is underway in this direction:

  1. Service providers will have to set up special funds that will be used to pay off their debt in the event of bankruptcy, without having to touch their clients’ assets.
  2. A change in the law prevents crypto companies from accessing their customers’ money in the event of a problem or bankruptcy.

As for foreign projects, especially American ones, they should not apply in Europe for security reasons. Indeed, the amounts to be put in reserve to practice on the Old Continent are much higher than those allowed by the United States.

Nevertheless, according to Dimitrios Psarakis, the MiCa law treats digital assets in the same way as a traditional financial investment. Many shortcuts are detectable and could paralyze the industry in the short term. However, according to Joana Neto, the rules that will apply in 2023 are not immutable. An observation period will be applied and after 18 months the European Union can correct the text or come back if necessary.

Finally, the rules do not apply to non-fungible tokens for the time being. Because these cannot be applied to traditional financing, such as cryptocurrencies, a special law will have to be applied. It is therefore clear that the protection desired by the European Union is not yet complete, as NFTs also carry their share of the risk.

The future of unhosted crypto wallets and stablecoins is still up for debate

Last week the news fell: unhosted crypto wallets are entitled to a small preferential treatment. Unlike other wallets, these will benefit from a modified ceiling. This decision is subject to change, however, as the subject is still under discussion. Only one thing remains certain: cold wallets are indeed allowed!

Stablecoins must also be affected by the MiCa law. On the other hand, algorithmic assets will be removed from regulation because they depend on their provider and not on a fiat currency. The rest will have to be carefully referenced.

Finally, the cryptosphere will not have long to breathe, as a new taxonomy law should also see the light of day in 2023. This concerns the impact that industry, in particular mining, will have on the ecology.


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