MiCA Adaptation of Your Crypto Company
The crypto market has now become a crucial part of the financial landscape. This rapid growth attracts retail institutional investors, thus accelerating global adoption.
As more cryptocurrency exchanges start to open, fintech companies are joining the bandwagon, with the likes of Revolut and PayPal adding the option to sell and buy cryptocurrencies.
Contents
What is MiCA?
The MiCA (Markets in Crypto-Assets) regulation is a detailed framework that the EU developed to regulate the services and digital services surrounding them. As part of the European Union’s wider Digital Finance Strategy, MiCA aims to harmonize the regulatory landscape in the EU. This, in turn, provides legal certainty and clarity for consumers and businesses alike.
It covers various activities related to cryptocurrency, including trading, issuance, and provision of crypto-assets. The rules and regulations apply to entities operating in the EU, thus ensuring businesses follow rules across the entire region.
The Market’s Key Objectives
One of its key objectives is consumer protection. Entrepreneurs must ensure investors and consumers are well-protected and informed from market abuse and fraud. MiCA mandates that service providers implement strong security measures and clear disclosure requirements.
Another objective is financial stability. This means you need to reduce risks to financial stability by simply regulating stablecoins. MiCA needs issuers of tokens to meet financial and stringent operational requirements, thus ensuring their dependability and stability. Other key objectives include the following:
- Regulatory clarity: Develop a unified regulatory framework in the EU. This will minimize the legal compliance complexities and uncertainties for market participants.
- Innovation & competition: Provide a detailed and clear regulatory framework to support the growth and foster innovation of the cryptocurrency market.
Preparing for MiCA Compliance
With the regulatory framework already set to take effect this year in full, businesses must take the right steps to align with new legal aspects. Here is how you can prepare for crypto-assets compliance:
1. Do a Regulatory Evaluation
Businesses must evaluate how crypto-assets apply to their operations. That includes reviewing business models, identifying regulatory gaps, and ensuring all the internal policies align with every compliance requirement. A law firm may help your business transition to crypto-asset market compliance.
2. Ensure Consumer Protection & Transparency
One of the key elements of crypto-assets is to enforce transparency with customers. This requires CASPs to provide non-misleading and clear details. A white paper issued for tokens should have comprehensive disclosures, including technological aspects and risks of tokens.
3. Implement AML and KYC Procedures
According to FATF and MiCA standards, you must implement both AML and KYC procedures. This doesn’t just involve verifying customers’ identities before transactions; it also encompasses monitoring transactions for suspicious activities.
4. Get the Right Licenses and Certificates
Cryptocurrency service providers that operate in the European Union regions must secure a license. For instance, in Malta, companies with VFA permits that the MFSA issue might need to update their licensing structure. But you can always consult a law firm to help you do the following:
- Navigate the entire application process
- Liaise with several regulatory authorities
- Prepare legal documents
The bottom line is that crypto-asset markets are undergoing a great transformation. As regulations mature and technology progresses, these markets are set to reshape digital finance’s future.
