After two consecutive delays, the European Parliament has conducted the final vote on the Markets in Crypto-Assets Act, known as MiCA. The legislation, introduced for the first time back in 2020, needs approval from the European Council before becoming effective regulation.
On April 20, immediately after voting, MiCA's rapporteur and member of the European Parliament, Stefan Berger, called MiCA "A milestone for the crypto asset industry."
With MiCA, European policymakers aim to set standard regulations and establish harmonised rules for crypto assets at the EU level, thereby providing legal certainty for the crypto industry and investors.
The regulation will establish guidelines for the operation, structure, and governance of issuers of digital asset tokens. It will also offer rules on transparency and disclosure requirements for issuing and trading crypto.
According to Chainalysis, the specific provisions of MiCA related to stablecoins will come into force in July 2024, while others, including those on crypto assets service providers, will apply in January 2025.
The regulation is perceived mostly with cautious optimism. There are, however, several issues with the 400-page document. The current draft generally lacks any mention of decentralised finance (DeFi), fails to address the growing crypto lending and staking sector, and doesn't specify any rules for nonfungible tokens.
At a recent panel during Paris Blockchain Week 2023, Janet Ho, head of EU policy at Chainalysis, said that the success of MiCA would depend on robust feedback and the reworking of certain parts of the documentation. He was joined by Nadia Filali, Caisse des Dépôts Group's blockchain program director, who stressed the importance of governments, regulators, and industry participants developing regulations together.
However, EU officials emphasised the safety of the investors as the primary task of MiCA. As Joachim Schwerin, one of the principal economists within the European Commission, said in a recent interview with Cointelegraph, MiCA should minimise the negative consequences of incidents like the insolvency of FTX in the future.
The MiCA vote and the impending regulatory framework represent a significant step forward for the crypto industry. By establishing standardised regulations and guidelines, MiCA aims to provide legal certainty, transparency, and stability for the market. It is a crucial milestone that will shape the future of the crypto asset industry in Europe.
The introduction of guidelines for the operation, structure, and governance of issuers of digital asset tokens will bring much-needed clarity to the industry. With clear rules on transparency and disclosure requirements, investors will have access to reliable information, promoting market stability and attracting institutional investors.
Furthermore, MiCA will create a harmonised regulatory environment across Europe, streamlining processes for issuers, exchanges, and wallet providers. It will reduce barriers to entry, facilitate cross-border transactions, and enhance market efficiency. By promoting fair competition, MiCA will foster a healthy and vibrant crypto industry within the European Union.
The focus on stablecoins is particularly significant, as it addresses concerns surrounding their stability and potential risks. The specific provisions related to stablecoins will ensure that issuers adhere to security and risk mitigation requirements. This will enhance investor confidence in stablecoins and contribute to the overall stability of the crypto market.
Investors in the Digital Large Cap Fund managed by Geco Capital can look forward to the combined impact of MiCA and the upcoming Bitcoin halving in 2024. Bitcoin halving has historically led to an increase in price due to reduced supply. With the regulatory clarity brought about by MiCA, coupled with the potential price surge following the halving, the Digital Large Cap Fund presents an attractive investment opportunity.
In conclusion, MiCA's approval will establish a robust regulatory framework for the crypto industry in Europe. The legislation's focus on legal certainty, transparency, and investor protection will pave the way for the industry's growth and maturation. By investing in funds like the Digital Large Cap Fund, investors can position themselves to benefit from the evolving crypto landscape and the opportunities presented by the harmonised regulatory environment. As the market continues to develop and institutional investors enter the space, the Digital Large Cap Fund is well-positioned to generate attractive returns in the emerging crypto market.