MiCA: The new regulatory benchmark for crypto assets in the European Union

MiCA: The new regulatory benchmark for crypto assets in the European Union

The world of digital currencies and assets has seen an explosive growth, prompting both opportunities and challenges for regulatory authorities. Eventus, a multi-asset class trade surveillance, market risk and transaction monitoring solutions provider, recently explained what firms need to know about MiCA.

Striving to secure investor interests, counter financial crime and fuel innovation, the European Union (EU) has made a notable stride with the Markets in Crypto Assets Regulation (MiCA). It lays a substantial focus on thwarting Market Abuse and detecting deceptive practices, marking requirements for Virtual Asset Service Providers (VASPs) or, Crypto-Asset Service Providers (CASPs) as per MiCA terminology.

To detect and avoid such activities, MiCA introduces regulations encompassing monitoring trading patterns, order book manipulation, wash trading and insider dealing. Trade surveillance software such as that provided by Eventus can pinpoint instances of suspected market abuse, thereby enhancing market integrity and investor protection under MiCA.

MiCA outlines exhaustive rules for issuers, service providers, and digital asset trading platforms operating within the EU, having gained EU Parliamentary approval on 20th April 2023. It sets out requirements for capital, custody, investor protection, and governance, with the aim of bringing increased transparency and stability to the crypto market. By formulating clear guidelines, MiCA seeks to offer legal certainty, bolster market integrity, and safeguard consumers.

Post its publication in the Official Journal of the European Union, the timeframe for implementation has commenced and it officially enters into effect on the 20th day following its publication. By 30th June 2024, both the European Securities Markets Authority (ESMA) and the European Banking Authority (EBA) will develop draft Delegated Acts on both Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS). Titles III and IV, addressing asset-referenced and e-money tokens, will start to apply. By 30th December 2024, the remaining parts of the rules will start to apply across EU member states.

MiCA has set a number of goals including: protecting investors and consumers participating in the crypto industry by enforcing stringent standards for service providers and requiring authorisation; providing regulatory clarity and consistency across EU member states; and fostering innovation and technological advancements in the crypto space.

However, there are challenges to address: regulations must be proportional to the risks associated with different types of digital assets and activities, EU’s global competitiveness must be maintained, and the regulatory frameworks must adapt to the rapidly evolving crypto industry.

With MiCA, a significant milestone in the regulation of crypto assets within the European Union is achieved. Validus assists in meeting the stated regulatory requirement of effective digital asset surveillance by monitoring manipulative behaviours.

Eventus, the leading global provider of multi-asset class trade surveillance, market risk and algo monitoring solutions, offers its powerful, award-winning Validus platform across various markets including equities, options, futures, foreign exchange (FX), fixed income and digital assets.

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