What You Should Know About The Latest MiCA Regulations Coming December

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Brace yourselves: more regulations are coming to an EU territory near you. The latest phase of MiCA (Markets in Crypto Assets) kicks in from December, and while the industry has had plenty of time to prepare, their passage will nevertheless necessitate some changes in the way crypto business is done.

For CASPs in particular – that's Crypto Asset Service Providers – the next phase of the EU-wide regulations must be followed closely. They introduce rules concerning token issuing, enhanced AML requirements, and require all CASPs operating in the EU to have full authorization. Here's what you need to know, whether you're a crypto company or crypto user based in the EU.

It can be hard keeping pace with the flurry of regulations being flung at the industry. No sooner have participants gotten acquainted with one set of rules than another comes along demanding to be mastered. MiCA has been a long time in the making, and while some in the industry have reservations towards its design in entirety, it's nevertheless been accepted by the crypto companies that are obliged to accede to it.

The first phase of the EU crypto legislation commenced in June, but its final form will become manifest in December. The biggest change being introduced is that all CASPs will need to be authorized to operate within the EU including meeting strict security, governance, and compliance requirements. While this places an additional burden on crypto companies, they've had plenty of time to prepare and it's hard to find fault with the intent behind this legislation .

The most controversial aspect of MiCA concerns stablecoins. The regulations that came into effect at the end of June placed a limit on stablecoin volumes permitted over a fixed period. It's clearly an attempt at reducing crypto's ability to supplant the Euro, particularly given the fact that most stablecoins are USD pegged.

But things are going to get even more complicated for stablecoin issuers come December, who will be obliged to possess an e-money authorization in at least one EU member state. This is evident by Circle obtaining an Electronic Money Institution (EMI) license from the French regulatory authority, allowing it to issue USDC and EURC and serve customers in Europe. While Circle has the resources to pursue this compliance requirement, the same cannot be said for smaller stablecoin issuers. Aside from the inconvenience this presents for issuers and for EU exchanges that list these assets, it sets a worrying precedent. What's to prevent the EU from enforcing a similar mandate on all tokens that aren't "sufficiently decentralized"?