The move marks the first time that an EU-level legal framework has been introduced to the crypto sector. The regulation covers various types of crypto-assets, including utility tokens, asset referenced tokens, and stablecoins. 

It aims to enhance transparency, and develop a framework for issuers and service providers in the crypto market. MiCA will go into effect in 2024 across all 27 EU member states. The unified approach will be an improvement on the current situation, according to the European Council. 

Currently, member states have their own national legislation for crypto-assets, which is incongruent with the global nature of crypto markets. A consistent regulatory environment within the EU is expected to improve market operations and bolster investor confidence, according to the release. 

A key feature of the MiCA regulations will be increased rules for crypto providers. Providers will now need a license to issue, trade, and safeguard crypto-assets. Operating without a license will place that provider on a public registry to document their non-compliance, with the goal of preventing terrorist financing and money laundering. 

Among the key changes are customer protection strategies as well. Crypto providers will now be liable if they lose investors’ crypto-assets under the new regulatory framework. This clause was influenced by the collapse of FTX, one of the world’s largest crypto exchanges. The collapse led to over $8.9 billion (£7.1bn) in unaccounted customer funds. According to a freedom of information request from the BBC, 80,000 of the victims are thought to have been in the UK. 

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Elisabeth Svantesson, the Minister for Finance of Sweden said: “I am very pleased that today we are delivering on our promise to start regulating the crypto-assets sector. Recent events have confirmed the urgent need for imposing rules which will better protect Europeans who have invested in these assets, and prevent the misuse of the crypto industry.”

The MiCA proposal was first presented by the European Commission on September 24, 2020, as part of a larger digital finance package. The Council of the EU adopted its negotiating mandate for MiCA on November 24, 2021. Discussion with co-legislators started on March 31, 2022, and concluded with a provisional agreement on June 30, 2022. The formal adoption of the MiCA regulation represents the final step in the legislative process.