Businesses should not be underestimating achieving MiCA (the European Markets in Crypto-Assets Regulation) compliance. It will not be easy. Although most businesses are aware of the new landmark piece of European legislation due to become applicable at the end of 2024, but how many understand the full implications for entities engaging in crypto-assets business in the European Union (EU)?

The framework will become applicable in two key stages:

1. On June 30, 2024, MiCA provisions addressing stablecoins already became applicable
2. On December 30, 2024, the remainder of the provisions will come into force.

Regulation of crypto-assets

The EU will soon regulate crypto-asset activities, and anyone dealing in crypto-assets will require a license for ten types of services including custody, brokers and exchanges. This regulation, similar to the MiFID II framework, applies only to crypto-assets not covered by other financial legislation. Service providers, including those outside the EU, must obtain a licence from a national authority, as there is no third-country regime and a very limited possibility to rely on the reverse solicitation exemption.

Cross-border implications of the UK Regime

Extending a crypto-asset business to the UK will require separate authorisation from the Financial Conduct Authority (FCA). The UK Regime will cover both domestic and foreign businesses providing services to persons in the UK, with no overseas person exclusion. The possibility of reverse solicitation or equivalence is uncertain.

The full briefing providing in-depth analysis is published on Law.com here.