Markets in crypto assets regulation

The MiCA Directive (Markets in Crypto-assets) is embedded in a series of other European capital market regulations (MiFID, MiFID ii, MiFIR) and has the same importance for players. In the first place, it will concern persons who issue digital assets or offer services related to them. Markets in crypto assets regulation will also apply to companies that are registered in other countries but offer their services on the European market. This approach is also contained in MiFID for the purpose of investor protection.

Regulation of stakecoins by MiCA (e-money tokens)

For steablecoins there is a separate category – digital money token (electronic money token). These rules are built into existing regulations, as digital money tokens will now be included in the digital money category. Therefore, the provisions on digital money issuers (EMI, electronic money issuer) will be applied to state-traded persons. They have independent requirements: license, authorized capital and others. The issuers of the Steablecoin will not be able to prescribe the terms on which clients will receive income depending on the duration of ownership. Otherwise it can be equated with deposits, and therefore confidently apply banking legislation.

Asset-referenced tokens: rules for issuers of MiCA

The status of asset rights token issuers appears. The reserve requirements are now certain. This will require the adoption of a policy that specifies:

  • List of assets to which token values are tied;
  • Types of assets included in reserves;
  • Describes the procedure by which tokens are created and destroyed;
  • Indication of whether reserves are invested;

In case of investment, the investment policy should specify how these actions will affect the value of reserve assets. In addition, the issuers of such tokens must always have at least 350 thousand. Euros, or 2% of the reserve assets. Issuers of asset-referenced tokens are also prohibited from setting interest based on the period of ownership of tokens.

Essential Tokens of Markets in crypto assets

The European regulator paid special attention to the issuers of significant tokens. Their criteria are more judgmental. Among the conditions, for example, the number of buyers, market capitalization, number and size of transactions with such tokens. This regulation is likely to apply to existing large sites that have a user base and through which tokens will be distributed. One of the main examples is the release of Facebook’s cryptocurrency Libra. Although many provisions of Markets in crypto assets are predictable given the existing policies of European bodies, the project in any case helps to predict legal risks. As a rule, all projects are created in the long term, given the time for development and legal procedures. Therefore, it is worth taking into account the MiCA Directive when creating crypto companies for the European market.