EU Markets in Crypto-assets Regulation (MiCA) impending

The EU Markets in Crypto-Assets Regulation (MiCA) is expected to be passed in April 2023 according to the European Parliament’s legislative updates.

AIFMs managing crypto funds may be considered as crypto-asset service providers (CASP) and will, as such, be subject to the MiCA framework.

In relation to AIFMs, a few key takeaways of the proposed MiCA regulation are:

• In order for an AIFM to provide crypto-asset services, the AIFM must either (a) be authorized under the AIFMD, or (b) obtain a separate CASP authorization under MiCA.
• An AIFM authorized under the AIFMD needs no separate authorization under MiCA in order to act as a CASP, but before providing crypto-asset services for the first time the AIFM must notify and provide certain documentation to the competent authority.
• The MiCA framework seeks to protect investors from potential risks in relation to crypto-assets, and an crypto-asset service provider AIFM must assess each of its investors, or potential investors, in order to determine if crypto-assets are suitable for the investor. An AIFM may not provide crypto-asset services to an investor if not suitable. ESMA is expected to later publish more detailed suitability criteria and requirements.

Next steps: MiCA will enter into force 20 days after its publication in the Official Journal of the European Union. Except for the rules regarding asset-referenced tokens, which are expected to apply 12 months from its entry into force, the rules are expected to not apply until 18 months from its entry into force offering a substantial grace period. However, each national member state may decide to shorten the grace period.

Tags:  Crypto-assetsMiCA