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The Markets in Crypto Assets Regulation (MiCA) represents a significant development in the European Union’s efforts to digitalize finance. With the aim of fostering innovation and maintaining the financial stability of the European Union, the MiCA Regulation was introduced. The EU, always at the forefront of regulatory developments, proposes the first global comprehensive legal framework in the crypto sector.
Many stakeholders are affected by this legislation, including stablecoin issuers, wallet providers, exchanges, and issuers of crypto assets. The scope of this regulatory framework is to regulate crypto assets and their related activities, thereby strengthening investor protection, safeguarding financial stability, and supporting innovation within the EU crypto market.
This blog provides an overview of MiCA and explores its objectives, scope, key requirements, enforcement strategies, and the challenges facing the cryptocurrency sector.
Why was MiCA introduced?
The European Commission has closely monitored the rise of crypto assets as a blockchain-based financial innovation. Following the crypto market boom in 2017, the Commission called for investor warnings and tasked the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) with evaluating whether current financial laws could effectively govern these assets.
The assessment showed that while some crypto assets fall under existing EU financial legislation (e.g., MiFID II), many do not, making enforcement difficult. It also highlighted crypto’s volatility and exposure to illicit activities—issues undermining market integrity and investor confidence.
Recognizing these challenges, the Commission proposed MiCA on 24 September 2020 as part of the EU’s Digital Finance Package. The final text was published on 9 June 2023 and entered into force on 29 June 2023. It is directly applicable in all Member States.
Scope of MiCA Regulation
MiCA defines a crypto asset as “a digital representation of value or right that can be transferred and stored electronically using distributed ledger technology or similar technology.”
Three categories of crypto assets are defined:
- Asset-referenced tokens (ARTs): Not e-money tokens. These maintain a stable value by referencing one or more assets or rights (e.g., Tether Gold).
- Electronic money tokens (EMTs): Pegged to one official currency and usable as a means of payment (e.g., USDT). Only authorized credit or e-money institutions may issue EMTs.
- Other crypto assets: Includes utility tokens that provide access to a good or service via the issuer.
MiCA also distinguishes between significant and non-significant tokens, depending on value, user base, and issuer scale. Significant tokens are subject to stricter prudential and governance requirements.
MiCA applies to crypto assets not already governed by EU laws such as MiFID II or the E-Money Directive (EMD2).
Key Requirements and Obligations
Issuers and CASPs must act honestly, fairly, and professionally. They must publish a white paper detailing the token’s purpose, risks, rights, and responsibilities in a clear, non-misleading format.
Crypto Asset Service Providers (CASPs)
MiCA requires CASPs to obtain a license from a national competent authority (NCA). Once licensed, CASPs benefit from passporting rights across the EU, that authorizes them to operate and provide their services within the Union.
CASPs must also meet capital thresholds and submit policies covering:
- Security measures
- Complaint handling
- Operational resilience
- Conflict of interest management
These requirements aim to promote market integrity, protect consumers and to improve the quality of services they provide in the crypto asset market.
Crypto Asset Issuers
Issuers offering crypto assets to the public must:
- Be registered legal entities in the EU
- Publish a detailed white paper explaining the technology, rights, risks, and obligations
- Notify the NCA before offering tokens publicly
- Ensure marketing materials are fair, clear, and not misleading
Issuers of ARTs and EMTs
ART issuers must obtain authorization, unless they are credit institutions. In that case, submitting a white paper 90 days prior to issuance is sufficient.
EMTs can only be issued by authorized credit or e-money institutions and must allow redemption at par value. No interest may be paid. Funds must be safeguarded—typically via central bank deposits or conservative investments.
Offerings under EUR 1 million over 12 months are exempt from full compliance, supporting early-stage innovation.
Enforcement and Supervision
MiCA clearly defines supervisory roles.
NCAs are responsible for:
- Licensing CASPs
- Reviewing white papers
- Monitoring daily operations
- Enforcing rules
- Ensuring market integrity
EBA supervises systemically important tokens, ensuring capital and reserve compliance, those requirements must be adequately complied from their issuers.
Consequences for Non-Compliance
NCAs may withdraw licenses, ban activities, or issue public warnings based on severity.
Challenges
MiCA is a major step toward crypto regulation but has hurdles. Compliance costs may burden smaller firms. MiCA focuses on centralized providers, leaving DeFi and NFTs largely unregulated.
Conclusion
MiCA establishes the EU’s first comprehensive regulatory framework for crypto assets and related services. As part of the Digital Finance Strategy, it aims to support innovation while ensuring stability and investor trust. MiCA sets a precedent for global crypto regulation, and its implementation will shape the future of digital finance in the EU and beyond.
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📚 Sources
- Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on Markets in Crypto-Assets. OJ L 150, p. 40.
- Jamie L. Cross, Chenghan Hou and Kelly Trinh, Returns, Volatility and the Cryptocurrency Bubble of 2017–18 (2021) 104 Economic Modelling 105643.
- European Commission, Digital Finance Package (accessed 2 June 2025).
- Article 3(1)(5), 3(1)(6), 3(1)(7), 3(1)(9), 6, 27, 43, 56, 61, and 64 of MiCA.
- Chainalysis, MiCA’s Stablecoin Regime and Its Remaining Challenges: Part 1.
- Coinbase, What Is MiCA (Markets in Crypto Assets Regulation)?.
- Osborne Clarke, What Are the EU’s White Paper Requirements in MiCAR and Do They Apply to Bitcoin? (accessed 2 June 2025).
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