Financial Crime World

EU Introduces Markets in Crypto-Assets (MiCA) Rules to Combat Financial Crime

The European Supervisory Authorities have introduced the Markets in Crypto-Assets (MiCA) rules, aimed at harmonizing cryptocurrency regulation at the EU level and better protecting assets while combating financial crime. The new regulations come into effect in 2024, with a lengthy implementation process expected to take four to five months.

Key Changes

  • Brings crypto-assets, their issuers, and service providers under one regulation
  • Improves market integrity, consumer protection, and financial stability while promoting innovation and the use of crypto-assets
  • Requires crypto-asset service providers (CASPs) to protect users’ wallets and investors from investment and fraud risks

Classification of Crypto-Assets

The new rules will classify three types of crypto-assets:

  • E-Money Tokens (EMTs): Supervised by the European Banking Authority (EBA)
  • Asset-Referenced Tokens (ARTs): Supervised by the EBA for “significant” issuers
  • Utility Tokens: No specific supervision

Benefits and Opportunities

  • Allows businesses to obtain authorization from one EU country and conduct business across the entire EU
  • Promotes business growth and creates a gold standard for crypto-asset businesses globally

Combating Financial Crime

The introduction of MiCA contributes to the fight against money laundering, with compliance with the EU’s 4th Money Laundering Directive (4MLD) being one of the authorization requirements. Crypto-asset providers will have to demonstrate how they meet the 4MLD rules, including:

  • Conducting Know Your Customer (KYC) checks on all clients
  • Extra due diligence on customers from High Risk Third Countries

Compliance Measures

CASPs must heighten their compliance measures to prevent breaches, respond to risk, remediate major issues, monitor ongoing business activities, and expand digital asset product offerings safely.

Getting Ready for MiCA

Experts warn that the best way for businesses to be MiCA-ready is to start preparing now. A detailed understanding of the MiCA requirements and existing market regulations is essential for successful authorization.