Approval of MiCA Regulation important for crypto

Bitvavo31. Mai 2023

Summary (TL;DR)

MiCA ensures a level playing field, better consumer protection and more confidence in the crypto industry. We support this expansion of regulations. However, MiCA needs to be further detailed. A point of attention for us is that the rules will apply specifically to the digital currency market. In the coming period, we will actively work to ensure that legislation is balanced, appropriate and workable for all parties.

Approval of MiCA Regulation important for crypto

Update: on Wednesday the 31st of May the European Union officially signed this regulation.

The European Parliament took an important step in further regulating the crypto sector at the end of April by passing the “Markets in Crypto Assets” (MiCA) Regulation. Many people will have shrugged reading the news. Still, MiCA is a giant leap in the maturing of the crypto sector. It’s good that the EU is taking the global lead in this. All the more reason to inform you about this.

Bitvavo supports regulation

The rules that the EU agreed to last week are a framework for now and will be further elaborated. Although MiCA needs to be further detailed, we support this extension of the regulation in principle. It is good that the EU is taking the global lead. In addition, it is important that the rules that are drawn up are specifically aimed at the digital currency market and that it does not become a copy/paste exercise of the traditional finance world. No one wants a football referee at a hockey game.

Bitvavo contributes

Supervisors EBA and ESMA will propose additional regulations in the coming year to which market parties may respond. Bitvavo will proactively contribute to this to ensure that legislation is balanced and appropriate.

Distinguish reliable versus unreliable

The industry-wide rules are expected to come into effect in early 2025. We welcome the oversight and enforcement of the rules for a number of reasons. In the first place, we expect that further regulation will lead to more confidence in the sector. In addition, it is important that European regulations ensure a level playing field. Ultimately, this distinguishes reliable players from unreliable players. The benefit for the consumer is that they are better protected.

But what is MiCA?

MiCA is a framework to further regulate digital currencies, to better protect consumers and investors. We highlight a few things:

Crypto Assets

Different categories of crypto assets are defined, each with its own characteristics and related requirements.
Much attention in MiCA is devoted to the so-called stablecoins. There will be additional requirements for institutions that issue these coins. The aim is that the funding ratio of these stablecoins is enough so that investors can exit at any time.
Virtually all digital currencies admitted to trading in the EU must have a white paper, which must be sent to the regulator in advance.
There is not yet complete clarity for NFTs

Crypto Asset Service Providers (“CASPs”)

Additional rules will apply to the parties that facilitate the infrastructure. For example, platforms such as Bitvavo have minimum capital requirements, and customer assets must be kept separate from company property.
Custodians of digital currencies must establish and comply with a policy for this.
MiCA also discusses matters such as good governance (“governance”), outsourcing, complaints handling, and the mandatory provision of information about risks, among other things.
Like traditional financial markets, crypto parties are subject to an obligation to ensure that no market manipulation takes place.

Comply with the rules

Regulation of the digital currency market is not new. An important step was taken three years ago when it became mandatory for crypto parties to register with local regulators if they wanted to offer their services in a certain country. This was done to tackle money laundering, terrorist financing and sanctions evasion.

Bitvavo has been registered with DNB since 2020. We invest a lot of money and manpower to fully comply with the rules. Of course, the arrival of MiCA means that we have work to do to ensure that we meet all the new requirements. Fortunately, we have good compliance, risk and legal departments that ensure that we finish the preparations and implementation on time.

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