News - MiCA is live: the main changes

By Luc Vesters

MiCA is live: the main changes

It is the moment Europe has long been working toward: regulation of the crypto sector. Thanks to the Markets in Crypto Assets (MiCA) regulation, as of yesterday, July 1, EU-wide uniform rules apply to providers of Bitcoin, Ethereum and other crypto currencies. Here are the main changes.

Licensing requirement for crypto providers

As of today, there is a licensing requirement for crypto companies across the EU, especially those providing services to private investors. Firms must register with a financial regulator of a European member state. If the regulator issues a MiCA license, it is valid throughout the EU. If a crypto provider has more than 15 million active users in a calendar year, the European Securities and Markets Authority (ESMA) takes over supervision of the company.

In principle, applications should be processed by the end of the year. Until then, there is a transition period for applicants.

Whitepaper commitments: Greater transparency and accountability

In addition, crypto projects are now required by MiCA to publish white papers. These must not be "overly technical" in wording, so that investors get a simple overview of the project. This includes not only the purpose and significance of the project, but also the risks and the rights and obligations of investors.

MiCA makes the authors of the white paper liable for the statements made. If it turns out, for example, that "misleading" promises were made, investors can claim damages. In this case, the "directors" of the project are also liable with their private assets. This is currently causing discussions among legal experts.

Stablecoin regulation: question marks over USDT

New regulations also apply to stablecoins as of today. MiCA divides them into three categories: Asset-referenced Token (ART), e-Money Token (EMT) and other tokens that do not fall under this classification. The main difference is in the underlying asset of the coin. With ARTs, these are usually other cryptocurrencies such as Ethereum. With EMTs, these are official currencies such as the euro or the U.S. dollar.

Basically, issuers are subject to the same licensing and transparency requirements as other crypto providers. In particular, MiCA requires disclosure of the reserves with which the coins are backed. This is to avoid a fiasco like the collapse of the Terra ecosystem. There is also an interest rate ban on EMTs.

However, there are big question marks over the licensing of stablecoin Tether. There seems to be a delay in the approval process between the company and regulators. This creates uncertainty for investors and crypto exchanges alike. Trading platforms Uphold and OKX have announced their intention to suspend trading in USDT for EU users. Binance stated in a letter that there will also be restrictions. For example, USDT can no longer be purchased, but selling or exchanging into other cryptocurrencies will remain possible.

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