European Tech Regulation

Markets in Crypto-Assets Regulation

The Markets in Crypto-Assets Regulation (MiCAR) establishes a comprehensive set of rules and standards for the regulation of unregulated crypto-assets to provide legal clarity, consumer protection and market integrity – e.g., deterring market abuse and financial crime.

Affected businesses

MiCAR applies to issuers and crypto-asset service providers (CASPs).

  • Issuers are those that engage in the issuance, offering to the public and admission to trading of in-scope crypto-assets.

    Issuers of the following types of tokens are affected:
    • Asset-referenced tokens (ARTs): Sometimes referred to as stablecoins, ARTs track their value by referring to other assets or a combination thereof (this can be the value of official currencies or commodities).
    • Electronic money tokens (EMTs): Stablecoins which track their value against a single official currency and should not be confused with electronic money. The key difference is that EMTs use distributed ledger technology (DLT) or similar technology while electronic money does not.
    • Other crypto-assets: This broad category consists of all types of crypto-assets that are not ARTs or EMTs. They present a lower risk to consumers, markets and financial stability and will largely be utility tokens, which is reflected in the obligations that apply in respect of them under MiCAR.

Issuers of ARTs and EMTs are subject to authorisation requirements.

MiCAR also introduces the notion of ‘significant tokens’ for ARTs and EMTs. The categorisation of ARTs and EMTs as significant tokens will be performed by the European Banking Authority (EBA) and will trigger the application of additional (stricter) requirements to issuers of such crypto-assets.

Crypto-asset service providers (CASPs) are those that provide certain crypto-asset services in the European Union, such as:

  • Operating a trading platform for crypto-assets.
  • Providing custody and administration of crypto-assets on behalf of clients.
  • Exchanging crypto-assets for funds or other crypto-assets.
  • Executing orders for crypto-assets on behalf of clients.
  • Receiving and transmitting orders for crypto-assets on behalf of clients.
  • Providing advice on crypto-assets.
  • Placing crypto-assets.
  • Providing portfolio management of crypto-assets.
  • Providing transfer services for crypto-assets on behalf of clients.

Key impacts

Key obligations: MiCAR’s framework aims to ensure financial stability and market integrity, with some of the key provisions to achieve this including the following:

  • CASPs are required to act honestly, fairly and professionally in the interest of their clients.
  • Issuers and CASPs are required to ensure that investors are informed about potential risks – and be diligent in preventing market fraud and manipulation.
  • CASPs are subject to authorisation and operating conditions.
  • Detailing powers belong to the competent authorities – including the EBA and the European Securities and Markets Authority (ESMA).

Market abuse regime: MiCAR establishes a bespoke market abuse regime for crypto-assets that are admitted to trading or in respect of which a request for admission to trading has been made, regardless of whether the transaction, order or behaviour in question takes place on a trading platform. It bans market abuse in the secondary markets for crypto-assets.

Enforcement

MiCAR itself does not provide for fines or other criminal sanctions for noncompliance.

Key timings

MiCAR came into force on 29 June 2023, and the key dates are:

  • 30 June 2024: Provisions governing in-scope stablecoins became applicable.
  • 30 December 2024: Provisions governing the remaining crypto-assets will become applicable.

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