On June 30, 2022, the European Parliament and the European Council Presidency reached a provisional agreement on the markets in crypto-assets (MiCA) proposal. The proposal encompasses unbacked crypto-assets issuers, stablecoins, trading venues and crypto-asset wallets. Although national-level regulators have already begun to implement crypto-asset legislation, it is the first time that crypto-assets, crypto-assets issuers and crypto-asset service providers are all under a regulatory framework at the EU level.

The goal of MiCA is to protect consumers from investment risks such as fraud, market manipulation, and insider dealing, as well as hold crypto-asset service providers liable for loss. MiCA also requires relevant crypto-asset players to “declare information on their environmental and climate footprint”, and as a follow up, in two years “the European Commission will have to provide a report on the environmental impact of crypto-assets and the introduction of mandatory minimum sustainability standards for consensus mechanisms, including the proof-of-work.” MiCA further requires a public register of non-compliant crypto-asset service providers to be maintained by the European Banking Authority (EBA). Listed providers with parent companies in high-risk areas for money laundering, as well non-cooperative jurisdictions for tax purposes, are subject to additional checks within the EU AML framework. MiCA also has additional requirements related to stablecoins, non-fungible tokens (NFTs), and crypto-asset service providers (CASPs) authorizations.

The Council and Parliament will need to approve the provisional agreement before in enters a formal adoption procedure. More information on the provisional agreement on MiCA is available here.