The Day of Days Has Come: MiCA Published in the Official Journal of the EU

The crypto legislation “Markets in Crypto Assets” (MiCA), which was adopted by the European Commission in the past months, was published in the Official Journal of the European Union dated 09.06.2023. MiCA, which has been on the agenda for a long time, has become one of the most detailed and broad regulations published in the crypto asset area with its publication.

The countdown has begun for the actors operating in the field of crypto assets with the enforcement of regulation, different provisions of which will enter into force on different dates. Many obligations for cryptocurrency service providers will enter into force as of 31.12.2024. One of the reasons that make MiCA such a significant regulation is that MiCA will not only regulate crypto asset activities in EU countries but will also set an example for the rest of the world to regulate this field.

MiCA is a regulation that has been worked on since 2018, when crypto assets started to gain popularity and the economic volume of the sector increased. The EU initiated studies on the relevant regulation, due to the following reasons mainly; crypto assets are difficult to follow or cannot be tracked due to distributed ledger technology, can be used anonymously, new users are included in the sector every day, and the possibility of damage to these users increases due to fluctuating market conditions.

Examination of MiCA reveals that the main objectives of the regulation are protection of consumers and investors, transparency, supervision, energy use, prevention of manipulation, offences and money laundering.

The scope of MiCA includes crypto assets that were not previously considered under other regulations. As an example, security tokens covered by the Markets in Financial Instruments Directive (MiFIDII) are not considered within the scope of MiCA. In addition, it is stated that the European Securities and Markets Authority will make statements and publish decisions regarding which crypto assets will remain within or outside the scope of MiCA in the coming period.

There are various services related to crypto assets covered by MiCA. Considering these services, it is seen that MiCA categorises services similar to MiFIDII. In MiCA, which stipulates various obligations to be fulfilled, such as obtaining a licence for many services, many services such as storing and managing crypto assets on behalf of third parties, operating a trading platform for crypto assets, transferring crypto assets on behalf of third parties, and receiving and transmitting orders are regulated. Following the publication of MiCA, a regulation similar to the ones brought to the financial markets with MiFIDII was brought to the crypto asset sector.

In addition to the wide scope of services, the regional scope of MiCA will also affect the crypto asset sector worldwide. In case the services within the scope of MiCA are offered in EU countries, they will be considered within the scope of MiCA even if the location of the offering party is outside the EU.

Under the MiCA, several obligations, specifically licensing, are imposed on crypto asset service providers. In addition, the cost of meeting these obligations has also brought controversy. Since many new crypto asset service providers have entered the rapidly growing sector in recent years and service diversity has increased. However, it is not known how many of these service providers can fulfil the obligations in MiCA.

Moreover, after the bankruptcy of some of the biggest actors of the sector in recent months and the victimization of many people due to this reason, it was once again revealed how essential the provisions regarding audit and transparency introduced by MiCA and the obligations imposed on service providers are. It is aimed to create a much safer environment in the crypto asset sector in the upcoming period with MiCA.

As MiCA enters into force, similar developments may occur in Turkey in the coming days. Since Turkey has also enacted regulations similar to the EU directives in areas such as financial markets and banking. In addition, it can be stated that Turkey acts in parallel with the EU in recently regulated areas such as the protection of personal data. The EU’s behaviour towards the crypto asset area after MiCA will affect Turkey’s approach to this area.

You can reach the full text of MiCA published in the Official Journal of the EU here.

Tagged with: Gökçe, Yağmur Yollu, Elif Aksöz, Technology & Telecoms, MiCA, Crypto, Crypto Asset