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The development of crypto assets has slowly been able to change the usual economic structure of the world. Today, from questions of how to use it and what it is needed for, governments are moving to questions of how to regulate cryptocurrencies? Control of crypto relationships today is one of the big problems of the global economy as a whole since this sector is very fast-growing.
In the United States, there is now a conflict of interest between the SEC and the crypto industry. The state’s desire to control the actions of crypto entrepreneurs led the SEC to propose recognizing crypto assets as securities, which caused a wave of outrage among users.
On April 20, 2023, the European Union made adjustments to the set of rules governing the global crypto business — Markets in Crypto-Assets (MiCA). Let’s take a closer look and try to understand whether the EU’s intervention in the affairs of the crypto industry is really helping, or is this just another attempt to control this sector.
The main idea behind developing a new legal act was resolving inconsistencies when working with cryptocurrencies and eliminating uncertainty in legal approaches to their regulation. Rules are established for all EU member countries in accordance with:
- requirements for transparency of ongoing operations and open access to all information about crypto-assets available at auction;
- requirements for issuers of all cryptocurrency assets, tokens tied to them, as well as regulation and supervision of their activities;
- requirements for protecting the rights of holders of crypto assets, strengthening security systems;
- requirements to protect cryptocurrency owners from shadow transactions, leakage of personal information when concluding trade transactions, and manipulation of the crypto asset market.
Also, the new set of rules establishes the basic concepts associated with the crypto world. Now, at the official level, everything that was called “virtual assets” has been renamed “crypto assets”. “Electronic money token”, “asset-related token”, “service token” are considered separately. These types were identified according to the nature of the origin of the digital asset.
The terms “issuer” and “offerer”, “consensus mechanism” were officially approved, and the definition of “node” appeared as the main link of the network. In addition, the Regulations clearly indicate what a public offering is and what its criteria are (for example, if a company issues tokens for a public offering, then it is obliged to make publicly available in any form all information about it so that a potential buyer can calculate the risks in advance and decide before purchasing whether he needs this token).
The requirements for organizations issuing new cryptocurrency have also changed. Now, if a company wants to make its new crypto development publicly available, then, according to the new EU regulation, it is obliged to:
- Be a legal entity;
- Draw up a technical document on the crypto asset in accordance with the requirements of the Regulations and publish it;
- Prepare and publish all marketing communications related to the new product in accordance with the Regulations;
- Comply with the general requirements of the Regulations.
It is worth noting that the Regulations also take into account exceptions, for example, if a crypto asset is distributed for free, it does not need to follow the above rules.
The Regulation described in detail what constitutes a crypto activity in the understanding of the European Union. The so-called crypto asset services now sound like:
- operation of crypto wallets and crypto portfolios (asset management and storage);
- work of crypto exchanges;
- placement of crypto assets;
- crypto exchange (exchange of crypto for fiat or other tokens);
- execution of orders for crypto assets;
- personal cryptanalysis and provision of advice on crypto assets.
The Regulations clearly define the criteria by which it can be determined that a given type of activity does not fall under the control of MiCA. These include:
- financial instruments (their activities are regulated by other legislative acts);
- deposits;
- crypto lending;
- loyalty schemes with point systems;
- crypto assets that do not have an identifiable issuer;
- mining.
Crypto business is now, as you can see, under the hood of new rules of the European Union. The work of small businesses becomes especially difficult. MiCA primarily protects investors; for this purpose, all issuing companies are adjusted to a universal standard.
The European market for consumers of crypto services is huge and represents a fairly profitable place to implement your crypto business. But, due to new laws, it will be difficult for small businesses to even enter it. In this case, experts suggest moving to sites with more loyal jurisdictions.
In general, the MiCA Regulation protects crypto activities and should help improve the situation on the crypto market. Increasing the transparency of transactions will save clients from hidden actions and make crypto trading more honest. But at the same time, users are required to disclose their personal data, income and business data. And this is no longer so attractive, especially in the concept of anonymity of the cryptocurrency world.
Analysts argue that MiCA, in comparison with the same SEC, has created a very clear set of rules. According to them, today this is the most advanced model for regulating digital assets.
If you want to learn more interesting facts about crypto than read our ultimate guide about Verasity blockchain, its advantages and special features. And don’t forget to join the VRA Trading Contest on SimpleSwap!
The easiest way to buy, sell or exchange coins is to use SimpleSwap services.
SimpleSwap reminds you that this article is provided for informational purposes only and does not provide investment advice. All purchases and cryptocurrency investments are your own responsibility.
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