🇪🇺 MiCA: 

The EU's Markets in Crypto-Assets (MiCA) regulation has further legitimised cryptocurrency and this landmark framework could influence the entire industry worldwide. MiCA emerged from events like the Libra project (2019) and the ICO boom (2017), addressing the need for regulatory clarity to foster innovation while managing risks and protecting consumers and the market.

📅 Key Dates

- 30 June 2024: Stablecoin regulations took effect

- 30 December 2024: Crypto Asset Service Provider regulations come into force

🔄 Transforming EU Crypto Market

Here’s a summary of the potential impacts from MiCA:

1. 💱 Stablecoin Overhaul: Non-compliant stablecoins phasing out. Major exchanges started delisting tokens that do not meet MiCA standards in Spring 2024 - e.g. Uphold delisted:

Pax Dollar (USDP)* 

Tether (USDT)

Dai (DAI)

Frax Protocol (FRAX)

Gemini Dollar (GUSD)

TrueUSD (TUSD)

*note that Pax has had a stablecoin licence in Singapore since 2023 through the Monetary Authority Singapore (MAS) - where stablecoins can be pegged to the Singapore Dollar or any G10 currency. This may be attractive to stablecoin issuers preferring to have the option of which currency/s to back their tokens.

2. 💶 Euro Stablecoin Growth: An opportunity for Euro-denominated stablecoins to challenge USD-pegged token dominance - as of mid-2024, 99% percent of stablecoin market capitalisation is linked to the US dollar

3. 🛡️ Consumer Protection: The entire crypto value chain aligns to protect consumers and markets, building trust and stability, likely leading to more consumers using cryptocurrencies in their everyday lives.

4. 📜 Clear Issuance Framework: Practical, transparent standards attracting global teams seeking regulatory certainty — with the EU as a potential hub for compliant innovation.

5. 🔒 Market Integrity: Strong protection against market abuse and insider trading enhances crypto asset credibility.

🌍 Global Implications

• The EU taking the lead - The Brussels Effect - the phenomenon where European Union regulations and standards become global norms due to the EU's market size and regulatory influence, driving companies worldwide to adopt MiCA to access the EU market.
   
• The lack of comprehensive regulations in the US and UK may amplify MiCA's global impact. UK stablecoin regulation may not come into force until 2025 - this has been discussed by the UK Government and UK regulatory authorities since 2018 - is it an opportunity missed or still one for first movers to obtain UK licences and secure market share of GBP-denominated coin?

❓ Challenges

• "MiCA 2.0" is already contemplated for NFTs and DeFi - this will be a significantly more complex regulation given the decentralised nature of many of the products.
   
• Landing perfect regulation straight off the bat with innovative technology is as rare as a hen’s teeth, so some stablecoin requirements may need revisiting to avoid unintended consequences.

🚀 Path Forward

MiCA's success hinges on practical implementation and impact. It's a significant opportunity for EU leadership in crypto regulation, requiring concerted efforts from all stakeholders.

As the industry adapts, global coordination becomes crucial. A harmonised approach among major jurisdictions is key to an innovative yet rules-based Internet financial system, balancing growth with stability.

If you are a business that requires regulatory advice on crypto assets, MIN3 have deep expertise in global and jurisdictional requirements to obtain authorisations and licences. We combine this with our engineering expertise to ensure that clients build robust products that will comply with existing or future regulatory frameworks.