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We would like to inform you that on May 16, 2023, the Council of the European Union approved the EU Markets-in-Crypto-Assets Regulation (known as Mica Regulation) which defines common rules on cryptocurrencies that are directly applicable within the EU area.

MiCA REGULATION

In recent years, there has been a growing need to introduce a common protection legislation applicable to every crypto-asset investor, in order to prevent the risks associated with the use of these instruments and create a safe environment.

The MiCA Regulation defines normative requirements and describes operational procedures with regard to the following crypto-assets:

• Asset-Reference Token (ART);
• Electronic Money Token (EMT or stablecoin);
• Crypto-Assets other than ART and EMT (including but not limited to Utility Tokens).

We would like to inform you that non-fungible tokens (NFTs, unless they are not fractionable or are substantially fungible), DeFi (as long as the management of the protocol is not traceable, even in part, to identifiable entities), crypto-assets covered by the regulation of financial instruments and those that are issued by a central bank are excluded from scope of application of Mica Regulation.

 SOME KEY POINT OF THE REGULATION

Hereinafter, we indicate the main points of interest of the MiCA Regulation.

__________________Purpose of preventing market abuse: rules have been introduced to prevent abuse in cryptocurrency markets by including crypto-asset service providers in the scope of the AML legislation.

__________________Provisions on crypto-asset service providers: services on crypto-assets can only be provided by financial institutions and crypto-asset service providers (or Casp). They are required to:

• reside in a EU member state: crypto-asset service providers must establish their headquarters within one of the EU member states in order to have a business in the EU market.
• obtain the authorization from or notify national supervisory authorities: the Casp must obtain a specific authorization from national supervisory authorities in order to conduct business within the EU area. On the other hand, financial institutions are enabled to offer the same services upon a simple notification to national supervisory authorities.
• register: every crypto-asset service provider must be registered in the central registry managed by the European Securities and Markets Authority (or ESMA).

__________________Public offering of crypto-assets: publication of a “white paper” indicating the characteristics and risks of the crypto-assets to be emitted.

__________________Sanctions system: competent supervisory authorities may apply administrative monetary sanctions, proportionate, among others, to the gravity of the violation committed.

NEXT STEPS

The legislative process will conclude with the publication of the MiCA Regulation in the Official Journal of the European Union and its subsequent entry into force.

The application of the regulatory rules will follow a progressive system, according to which the rules for stablecoins will be applied 12 months after the MiCA comes into force (in the second half of 2023), while the other rules will be applied 18 months after the Regulations come into force.

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We remain available for any clarifications and insights and remind you that our firm, following the introduction of the new Innovation Department, guarantee assistance in crypto-asset and blockchain issues.