MiCA Law for Cryptocurrencies

MiCA Law for Cryptocurrencies

Tags:      Gig Economy     Economy     WTO     WTO Public Stockholding     MSP     Economic Growth     Masala Bond     Environmental Performance Index     Forecast of Economic Growth     Functions of the Finance Commission

April 26, 2023

The European Union has passed the world's first complete set of laws for cryptocurrency markets, known as the "Markets in Crypto-Assets (MiCA) law." The Markets in Crypto-Assets Act (MiCA) will regulate cryptocurrency in its totality for the first time. It is expected to create new worldwide norms for cryptocurrency regulation. The following are the key characteristics of the MiCA Law:

• MiCA will enforce compliance on Crypto Asset issuers, defined as "any legal person who offers to the public any type of Crypto-Assets."

• It will apply to Crypto-Asset service providers (CASPs) who provide one or more of the following services: operation of a trading platform such as CoinBase, custody and administration of Crypto Assets on behalf of third parties (customers), swapping Crypto Assets for funds/other Crypto-Assets, execution of orders for Crypto Assets, placement of Crypto Assets, transfer services for Crypto Assets to third parties, suggestions on Crypto Assets and Crypt.

• Depending on the nature of Crypto Assets, the rule mandates distinct sets of standards for CASPs

• Under the base regime, every CASP will be required to register as a legal company in the EU.

• They can get authorization in any of the 27 member nations and then provide services in all of them.

• They will then be overseen by regulators such as the European Banking Authority and the European Securities and Markets Authority, who will ensure that the firms have in place the necessary risk management and corporate governance practises.

• CASPs must show their financial stability and soundness, capacity to keep fund users secure, installation of measures to guarantee they are not participating in proprietary trading, avoidance of conflicts of interest, and ability to protect against market abuse and manipulation.

• In addition to authorization, Stablecoin service providers must offer important information in the form of a white paper.

• It will include information about the Crypto product and the main participants in the company, the terms of the public offer, the type of Blockchain verification mechanism used, the rights attached to the CryptoAssets in question, the key risks involved for investors, and a summary to help potential purchasers make an informed decision about their investment.

• Stablecoin issuers will also be obliged to have sufficient reserves equivalent to their value in order to avoid liquidity problems.

• Another piece of law implemented in conjunction with MiCA compels Crypto firms to provide information on senders and receivers of Crypto Assets to their local anti-money laundering authorities in order to prevent laundering and terrorist funding.

Source - The Economic Times