MiCA: What You Need to Know About the New EU Crypto Regulations

The Regulation (EU) 2023/1114, also known as MiCA (Markets in Crypto-Assets), is set to reshape the crypto landscape in the European Union and beyond. Effective from December 30, 2024, MiCA introduces comprehensive rules aimed at enhancing market transparency, stability, and investor protection. Here’s a closer look at the essentials.

📌 Purpose of MiCA

MiCA creates a harmonized regulatory framework for cryptocurrencies and digital assets across all EU member states. Its primary goals include:

• Ensuring market transparency and integrity.

• Protecting investors.

• Establishing consistent rules for businesses operating in the crypto space.

🔑 Classification of Crypto-Assets

MiCA classifies crypto-assets into three main categories:
    1️⃣ E-Money Tokens (Stablecoins): Crypto-assets that maintain a stable value by referencing one official currency. These are treated as electronic money under Directive 2009/110/EC.

2️⃣ Asset-Referenced Tokens: Crypto-assets linked to the value of other assets, such as real estate, securities, or currencies.

3️⃣ Utility Tokens: Tokens designed to provide access to specific goods or services offered by their issuer.

🛡️ New Licensing Requirements

MiCA introduces a new licensing framework for crypto service providers:

• CASP License:

  • All Virtual Asset Service Providers (VASPs) must transition to a MiCA CASP license by July 2025.

  • This license includes stricter requirements, such as minimum capital thresholds and operational standards.

  • Valid across all EU member states, eliminating the need for separate national licenses.

• Exemptions:
  Licensing is not required for:

  • Free services or those limited to restricted networks.

  • Offers made to fewer than 150 individuals per member state.

  • Transactions totaling less than EUR 1 million within a 12-month period.

🏢 EU Presence Requirement

To operate under MiCA, crypto service providers must establish an EU presence:

• Option 1: Have effective management and at least one director residing in the EU.

• Option 2: Create a subsidiary within the EU and apply for a CASP license from the relevant national authority.

🔍 AML & KYC Compliance

Crypto service providers must implement robust anti-money laundering (AML) and know-your-customer (KYC) procedures to ensure compliance with EU standards.

🚫 Exclusions from MiCA

Certain assets and activities fall outside MiCA’s scope, including:

• Financial instruments already regulated under MiFID II.

• Non-fungible tokens (NFTs), such as digital art and collectibles, with limited exceptions.

💼 How Zilver Law Firm Can Help

Navigating MiCA’s complex requirements can be challenging. Whether you need assistance with licensing, compliance, or legal strategy, Zilver Law Firm offers tailored solutions to help your business thrive in the evolving EU crypto market.

📩 Contact us today for professional guidance on MiCA compliance and other legal services.

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