An Introduction to the Markets in Crypto-Assets Regulation (MiCA)

What is the Markets in Crypto-Assets (MiCA) Regulation?

The Markets in Crypto-Assets Regulation (MiCA) represents a significant milestone in the European Union’s approach to regulating the rapidly evolving crypto market. MiCA establishes a comprehensive regulatory framework designed to harmonise the regulation of crypto-assets within the EU by mandating uniform rules for member states. MiCA covers crypto-assets that are not currently regulated under existing provisions and sets standards for transparency, disclosure, authorisation and supervision.

What are the main objectives of MiCA?

By regulating public crypto-asset offerings and improving consumer protections, MiCA aims to enhance market integrity and protect investors in the following ways:

• • • Regulatory supervision for crypto assets not currently regulated
    • Maintain and protect the financial stability of EU markets
    • Protect retail investors and mitigate risk from crypto assets
    • Establishing a regulatory framework for stablecoins

Regulatory supervision for crypto assets not currently regulated

By introducing a uniform regulatory framework for currently unregulated crypto-assets, MiCA ensures that issuers and service providers operate under consistent standards across the EU. This new regulatory framework supports market integrity and aligns crypto-assets with the compliance standards of other financial instruments.

Maintain and protect the financial stability of EU markets

By overseeing the issuance and trading of crypto-assets, MiCA aims to prevent market abuse and detect systemic risks. This enhances investor protection and supports the financial stability of EU markets.

Protect retail investors and mitigate risk from crypto assets

MiCA mandates certain transparency and disclosure requirements to ensure consumers are well-informed about the risks associated with crypto-assets. Investor education and awareness enhance customer protection and aim to steadily build trust in the crypto markets.

Establishing a regulatory framework for stablecoins

MiCA mandates specific rules for asset-referenced tokens and stablecoins, including requirements for reserve management and liquidity levels. This framework aims to ensure that stablecoins and e-money tokens are secure and reliable for users. E-money tokens are stablecoins that are pegged to a single currency such as the Euro or GBP.

Transaction Reporting Challenges Under MiCA

As MiCA introduces a regulatory framework for crypto-assets, firms will need to navigate new transaction reporting requirements alongside existing obligations. One of the biggest challenges will be adapting existing internal systems and processes to meet MiCA’s detailed reporting standards, particularly for the issuers of asset-referenced tokens (ARTs) and e-money tokens (EMTs). Cross-border compliance across multiple jurisdictions will become more complex as firms must manage the cross-border reporting requirements while aligning with traditional financial regulations.

The European Banking Authority (EBA) has introduced standardised reporting templates and data collection guidelines for ARTs and EMTs. These guidelines aim to improve regulatory oversight by ensuring that national competent authorities (NCAs) receive accurate, consistent and comparable data. The EBA sets clear rules for data submission to improve market transparency, facilitate risk monitoring and support financial stability in European markets.

Firms may face challenges integrating these reporting standards into their existing systems and processes while keeping up to date with future regulatory developments. As MiCA evolves, businesses will need to remain agile, ensuring that their reporting processes meet both crypto-specific and traditional financial regulatory requirements.

Novatus En:ACT is the market-leading SaaS platform, built in conjunction with a major global banking group, to ensure you meet your G20 regulatory reporting obligations in an accurate, timely and complete manner. Get in touch today and one of our experts will be happy to guide you through our offering.