Regulatory tightening and EU MICA - risk or opportunity
In this article, we’ll discuss the upcoming Markets in Crypto Assets (MiCA) bill proposed by the EU Parliament. The bill aims to clarify legal definitions regarding crypto assets and provide guidance for EU businesses wishing to trade in the cryptocurrency market.
What is MiCA?
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on Markets in Crypto-assets, and amending Directive (EU) 2019/1937
It’s part of a broader digital finance package, which, inter alia, also includes the Digital Operational Resilience Act (DORA) and the DLT Pilot Regime Regulation
MiCA is expected to enter into force in 2024.
Main idea of MiCA
The idea of creating common regulations for the entire European Union is aimed at the development of crypto-assets and wider use of DLT by introducing a safe and proportionate framework to support innovation and fair competition.
The divergent frameworks, rules and interpretations of both crypto-assets and crypto-asset services throughout the Union hinder the service providers’ ability to scale up their activity at EU level.
This means that service providers of these inherently cross-border products and services are forced to familiarise themselves with several Member States’ legislations, obtain multiple national authorisations or registrations and comply with often divergent national laws, sometimes adjusting their business model throughout the Union.
A dedicated and harmonised framework should support innovation and fair competition while ensuring a high level of consumer protection and market integrity in crypto-asset markets.
MiCA – main goals
- Legal certainty - ensure for crypto-asset markets a legal framework, clearly defining the regulatory treatment of all crypto-assets that are not covered by existing financial services legislation.
- Supporting innovation – support the development of crypto-assets and wider use of DLT by creating a legal framework that supports innovation and fair competition.
- An appropriate level of consumer and investor protection and market integrity.
- Ensuring financial stability – creating safeguards to counter potential threats to financial stability and an orderly monetary policy.
MiCA – definitions of crypto-assets world
The regulation introduces a number of definitions that allow you to organize the world of crypto-assets. The regulation contains, among others, definitions of:
- Distributed ledger technology or DLT - a type of technology that supports the distributed recording of encrypted data
- Crypto-asset - a digital representation of value or rights which may be transferred and stored electronically, using distributed ledger technology or similar technology
- Asset-referenced token - a type of crypto-asset that purports to maintain a stable value by referring to the value of several fiat currencies that are legal tender, one or several commodities or one or several crypto-assets, or a combination of such assets
- Electronic money token or e-money token - a type of crypto-asset the main purpose of which is to be used as a means of exchange and that purports to maintain a stable value by referring to the value of a fiat currency that is legal tender
- Utility token - a type of crypto-asset which is intended to provide digital access to a good or service, available on DLT, and is only accepted by the issuer of that token
MiCA – definitions of crypto-assets world
Another important definition in MiCA is the definition of a crypto-asset service provider.
Crypto-asset service provider - any person whose occupation or business is the provision of one or more crypto-asset services to third parties on a professional basis.
Crypto-asset service means any of the services and activities listed below relating to any crypto-asset:
- The custody and administration of crypto-assets on behalf of third parties;
- The operation of a trading platform for crypto-assets;
- The exchange of crypto-assets for fiat currency that is legal tender;
- The exchange of crypto-assets for other crypto-assets;
- The execution of orders for crypto-assets on behalf of third parties;
- Placing of crypto-assets;
- The reception and transmission of orders for crypto-assets on behalf of third parties
- Providing advice on crypto-assets;
What does MiCA mean for EU businesses?
MiCA imposes many formal and legal obligations on all market participants, which should detect potential problems and prevent potential threats.
All this should protect customers from situations such as the collapse of the Luna currency or FTX exchanges.
The application that legal persons intending to provide services in the field of crypto-assets should submit to the competent authority should include, among others:
- Name, including the legal name and any other commercial name to be used, the legal entity identifier of the applicant crypto-asset service provider, the website operated by that provider, and its physical address
- Programme of operations setting out the types of crypto-asset services that the applicant crypto-asset service provider wishes to provide, including where and how these services are to be marketed
- For all natural persons involved in the management body of the applicant crypto-asset service provider, and for all natural persons who, directly or indirectly, hold 20% or more of the share capital or voting rights, proof of the absence of a criminal record in respect of infringements of national rules in the fields of commercial law, insolvency law, financial services law, anti-money laundering law, counter-terrorism legislation, and professional liability obligations
- Description of the applicant crypto-asset service provider’s internal control mechanism, procedure for risk assessment and business continuity plan
- Descriptions both in technical and non-technical language of the applicant crypto-asset service provider’s IT systems and security arrangements
Also what is important
Crypto-asset services shall only be provided by legal persons that have a registered office in a Member State of the Union and have been authorised as crypto-asset service providers.
An example of the documents required to obtain a license and the conditions that a company must meet shows how the European Union wants to protect customers from fraudulent companies.
But on the other hand, it will be a challenge for companies from the crypto-assets market to adapt to all formal issues.
What are the risks associated with the implementation of MiCA?
- Transfer of requirements and regulations from the world of traditional finance to the world of Crypto without taking into account the specifics of the crypto-assets market which may result in slowing down the development of entities operating on the crypto-assets markets
- Problem with understanding the rules of functioning crypto-assets markets by the authorities delegate to perform control functions due to the lack of appropriate training and the appropriate number of specialists in this field
What are the opportunities offered by MiCA?
- Regulation of the crypto-assets market will open the possibility of cooperation between crypto-asset service providers and financial companies.
- The introduction of common definitions for the entire market describing the world of crypto-assets will make it easier for people who have not had contact with it before to understand it. This will be a step towards the adoption of DLT and crypto technologies by other sectors of the economy.
- A common legal framework for the entire market, supporting innovation and fair competition, will eliminate entities acting dishonestly or illegally from the market.
Even though MiCA has a fairly wide scope, it does not cover certain sectors of the crypto-asset markets that are very popular, such as:
The 5 Main Types of Crypto Attacks
In this article, we’ll examine the five main types of attacks that target cryptocurrency users.
Crypto Trends in October 2022
It’s October! What's trending in crypto this month?
Crypto Trends in September 2022
It’s September! What's trending in crypto this month?
Bitcoin Showing Signs of Resurgence After Catastrophic Dip: What's Contributed?
The Crypto Winter looms even as Bitcoin’s price shows signs of stabilising and resurging. Read on to discover ...
Tesla Sells Bitcoin Holdings: Will This See the Beginning of a Trend for Other Businesses Who Hold Crypto?
Tesla has sold off 75% of its Bitcoin holdings. Click here to find out why and whether other businesses will be ...
All About Crypto Seasonality
The total market capitalization of the top 100 cryptocurrencies has increased over the past seven years from ...
Getting to Grips with Arbitrage
The world of trading has many different tricks and tools refined over the years by strategists and financiers, ...
The Crypto Winter: Are There Any Advantages?
It seems that another crypto winter is among us, but what does it mean and are there any advantages? Click here ...
The Comparisons Between the 2018 Crypto Bear Market and Now: Are They Useful?
Cryptocurrency is currently heading into another bear market. Click here to find out how noting comparisons can ...
The Blossoming Intersection of Fashion and Crypto: What Does the Future Hold?
Over the last few years, fashion and crypto have been entwined together. Click here to find out what this means ...
Could Post-Merge Ethereum Have a Centralization Problem?
Ethereum recently completed its merge into Ethereum 2.0. Click here to find out if this will bring about a ...
Instagram to Add Support for NFTs
Instagram to launch NFT functionality on its platform in 100 countries worldwide
Can Ethereum’s Ecosystem Keep Its Future Bright Amidst This Crypto Winter?
Ethereum has steadily been building an ecosystem unlike any other. Click here to find out why its future remains ...
Buterin Criticises Bitcoin’s Stock-to-Flow Price Prediction Model – But What Is It?
The stock-to-flow prediction model has caused a mixed reaction amongst the crypto community. Click here to find ...
AVAX, the Ethereum Killer: What You Need to Know
AVAX, which is a token run on the Avalanche blockchain, is said to be the Ethereum killer. Click here to find out ...
A ‘Digital Library of Italian Culture’ in Puglia: Is It Expanding NFT Use to New Areas?
The University Aldo Moro is currently using NFTs as a way to reignite the culture of Puglia. Click here to find ...
Crypto’s Position in the Italian Economy: Will It Only Grow and What Would Regulation Do?
Crypto is continuing to grow in the Italian economy. Click here to find out how and what regulation might mean ...
Will the EU Adopt a Digital Currency?
Cryptocurrency is growing across the world, with more and more countries starting to embrace it. Click here to ...
Ethereum’s Proof of Stake System: Do Other Coins Use It?
Ethereum is currently switching to the proof of stake system. Click here to find out what this means and whether ...
Payment services affected during the June 8 public holiday
We are delisting Swipe (SXP)
Due to a change in the blockchain used by Swipe, SXP will no longer be supported.
Scheduled Maintenance on 05/06/2023
We will conduct scheduled maintenance from 06:30 to 07:00 (UTC+2) on 05/06/2023.
We are listing Ocean Protocol (OCEAN)
We will soon be listing OCEAN, the native token of the Ocean Protocol project
Our Slovakian license is approved!
The license is another achievement along our path to becoming the most well-regulated exchange in Europe
"Lights, Camera, Trade!" Trading Competition
Get ready for the zondacrypto rebranding trading competition!
Zonda is now zondacrypto
Your favourite crypto exchange is getting a new look and added features!
How is Zonda working during long May weekend?
Please note that during Long May weekend, our customer support team will be available as usual. However, during ...
Important Notice: We are delisting LUNC
To provide the safest trading experience for our customers, we regularly review each token on the exchange to ...
We’ve partnered with crypto tax experts Cryptiony!
Get 20% off when you sign up with our promo code
4. 08 Phishing: types and examples
Phishing is a type of fraud that involves impersonating another person or institution in order to extract data ...
4. 07 Investment scams. What to look out for?
Investment fraud is one of the most common recent threats that is oriented towards people who use the services ...
4. 06 Travel Rule
Travel rule is a rule well known from the traditional banking sector, which states that all funds sent from one ...
4.05 Crypto taxation in Poland
Every year in Poland, more and more people are investing in cryptocurrencies. This involves, among other things, ...
4.04 Illegal Activities in Crypto
In this lesson, we explore recent statistics and discover insights about criminal activities related to ...
4.03 DLT Pilot Regime
The Regulation of the European Parliament and of the Council on a pilot regime for market infrastructures based ...
4.02 Digital Operational Resilience Act (DORA)
In this lesson you will learn more about the Digital Operational Resilience Act (DORA), which as a part of ...
4.01 Markets in Crypto Assets (MiCA)
In this lesson you will learn more about MiCA, which aims to be the first comprehensive law regulating ...
3.03 The Dow theory: principles and statements
This lesson helps you understand the principles and statements of Dow’s theory.
3.05 Candlestick charts and patterns
This lesson focuses on understanding candlestick charts and patterns.
Invezz / Interview: Volatility, liquidity and what happens next for crypto – zondacrypto exchange
Anyone who has ventured into the cryptocurrency world will agree with one thing: the volatility is unmatched. Be it plummeting or soaring prices, crypto markets are notorious for the pace at which they move. In this interview, Stanislav Havryliuk, our COO, assesses the current situation on the crypto market.
US regulators are cracking down on stablecoins!
Blockworks spoke to our COO Stanislaw Havryliuk about the recent SEC action against @PaxosGlobal and stablecoin #BUSD
Should we expect to see similar action against #USDT and #USDC? Which #stablecoin is the safest option?
Meet the person that is creating ripples of growth in the crypto space
Our CEO Przemysław Kral is making headlines again!
In this feature from FoxInterviewer, he discusses the skills needed to succeed in the emerging digital assets industry, the importance of KYC and AML procedures, and the tools he is building at Zonda.
Business Insider recently had a chat with our CEO
Zonda’s CEO Przemysław Kral recent spoke to Business Insider about the importance of consumer safety and compliance in the crypto sector.
Read the full article, along with additional commentary from our COO Stanislav Havryliuk
How will the US banking crisis affect crypto? Our CEO spoke to Benzinga
The collapse of Silvergate has sent shockwaves through the crypto industry. Where will US crypto businesses now go for banking services?
Zonda CEO Przemysław Kral recently spoke to @Benzinga about this issue and the problems it could cause.
Zonda is now zondacrypto!
As the exchange continues to evolve and grow, we're thrilled to announce that we're rebranding and changing our name to better reflect our vision and values. We're still the same team you know and trust, but with a fresh new name that captures our spirit of innovation and customer-centric approach.
Some things may look a bit different but don’t worry - all operations remain the same and your login details work as usual.
Stay tuned for more updates and exciting changes as we embark on this new chapter together. Thank you for your continued support and loyalty!