The MiCA could put Europe ahead in the crypto regulatory race
As part of the European Commission's Digital Finance package, the MiCA framework was originally proposed in 2020. While it took until the end of 2021 for the proposal to be approved, the European parliament could ratify it as early as this quarter.
A recent report by analytics company CoinShares indicates that the MiCA negotiations are likely to conclude by midyear. If approved, MiCA could officially begin in summer 2024, transforming the crypto industry for the better.
Crypto companies operating in the EU could find the proposed EU digital asset bill to be a great relief for their bureaucratic burdens.
Regulation of the cryptocurrency market has been a hot topic for quite some time, but it wasn't until last year that governments around the world started paying more attention to it.
Some crypto and blockchain companies have a decentralized and global nature, which makes it difficult to adhere to local requirements. This is why the European Union's upcoming bill will help.
MiCA is unique in the regulatory space for a variety of reasons, including the fact that it understands four types of digital assets for the first time. Another unique aspect of this bill is its innovative way to deal with regulation in a fragmented union like the EU.
Digital assets under the proposed legislation are categorized according to four types: payment tokens, utility tokens, asset-referenced tokens, and e-money tokens. The legislation will not apply to CBDCs or security tokens, which are already regulated by the EU.
In addition to the ease of doing business outside of the EEA, the bill also makes it easier for businesses registered in an EEA country to expand to other regions of the region. However, MiCA ignores the DeFi market.
There has been a massive decline in innovation in the crypto and blockchain space as more and more large markets such as Russia and India take the initiative to restrict the industry. The European Union is taking the initiative to try to regulate the industry, which is a positive development overall.
CBW - External Analyst