European Parliament Votes In Favour Of Markets In Crypto Assets - Spectrum Markets Commentary

The European Parliament yesterday voted to approve the Markets in Crypto Assets (MiCA) law, a legislation on cryptocurrency.

 Alpay Soytürk, the Chief Regulatory Office at Spectrum Markets, the pan-European trading venue for securitised derivatives, commented on the European Parliament voting in favour of MiCA.

“On Thursday, MEPs approved Regulation (EU) 2019/1937 on Crypto Assets Markets by a majority of 517 to 38. Though probably mainly known to insiders yet, the regulation, called MiCA (short for Markets in Crypto Assets), represents nothing less than the world's first comprehensive regulation for the crypto sector.

It governs – starting July in a phased 18-month introduction period - the tokenisation of transferable assets or rights and defines uniform requirements for transparency and disclosure in relation to the issuance activity, operation, organisation and governance of crypto asset service providers. In addition, consumer protection rules and measures to prevent market abuse are part of it.

MiCA is also an important step towards fair competition in the spirit of the regulatory principle of “same activity, same risk, same rules”. Because for companies that provide services in connection with crypto values, which are considered financial instruments according to MiFID¹, in addition to the requirements from MiFID itself, the Prospectus Regulation², the Transparency Directive³, the Market Abuse Regulation⁴, the Short Selling Regulation⁵, the Central Securities Depositary Regulation⁶ and the Settlement Finality Directive⁷ are already applicable.

For a long time, legislators in many jurisdictions around the world have been very reluctant to take up the issue of regulating the crypto sector – probably for two main reasons. On the one hand, the topic is complex not just from a technological but also from a legal perspective due to the interconnectedness with existing legal norms from several disciplines. On the other hand, no economic area wanted to fall behind in the competition for domiciling companies in this promising sector by imposing overly restrictive laws.

However, there seems to be a growing consensus that a uniform and binding legal framework is the main ingredient of a competitive location policy. For the same reasons, the initiative is remarkable and to be welcomed at the same. It is not just consistent with existing financial market legislation but practice-oriented, too – after all, its originator is the European Union, otherwise often accused of bureaucracy and sluggishness. The fact that the EU has achieved a competitive advantage by adopting this law will become evident in the coming years when other countries around the world will use MiCA as a blueprint for their crypto regulation.”