EU's MiCA is finalised - A quick take (October 2022)

On 5 October 2022, the European Council approved the final text of the regulation on markets in crypto assets (MiCA). The law could come into force in 2024. A draft regulation was issued in October 2020.

A browse through the final text reveals that:

???? despite the newly formulated exemption for the offerings of cryptoassets in scope (those targeting less than 151 users per member state / not aiming to exceed a value of 1m EUR over 12 months), not much has been done to ease the admin / procedural burden that may therefore continue to deter pre-stage start-ups instead of promoting, pragmatically, financial innovation;

???? coins stabilised by fiat peg are subject to e-money provisions, while...

???? ...dedicated provisions rule the issuance of coins stabilised by other values or rights, or a combination thereof that may include one or more fiats, including when those issuances are dubbed significant;

???? the scope of the regulation excludes NFTs (provided they are not traded fractionally); these could be treated as securities; it also excludes cryptoassets resulting from staking (however, it is not entirely clear if another treatment applies);

???? the requirements characterising the whitepaper (few exemptions from issuing it include when cryptoassets are offered only to qualified investors) are more elaborated than in the 2020 draft, and feature enhanced / new requirements concerning risk warning / climate-related impact;

???? issuers of stablecoin defined under bullet 3, above, are exempted from issuing a whitepaper if the overall target value does not exceed 5m EUR over 12 months. If the target value of cryptoassets exceeds 100m EUR, quarterly reporting to authorities is mandatory. The issuance of such stablecoins is capped at maximums of 1m quarterly average transactions / 200m quarterly average value;

???? the thresholds in order to be consider a significant stablecoin have been increased. Referred to either the first 6 months after issuance or any period of 12 months after issuance, i) at least 10m customers instead of 2, ii) at least 5bn EUR of value instead of 1, iii) at least 2.5m transactions per day instead of 500k / at least 500m EUR of value per day instead of 100. It is unclear as to what happens to stablecoins with parameters falling between the cap under bullet 7 above and the criteria to qualify as significant;

???? regarding crypto asset service providers, there is newly the category of significant providers, with threshold set at 15m users in 1 year.

In sum, beside Parliamentary approval, before implementation can happen, ESMA and EBA will have to draft implementing technical standards and clarify a number of aspects left unclear at first read.