MiCA was introduced as part of a wider legislative package that included a proposal for a distributed ledger technology (DLT) pilot regime. MiCA was first proposed by the Commission in September 2020 in the context of its Digital Finance Strategy, which aims to develop several legislative measures intended to support and regulate the digital transformation of the EU financial landscape. Currently, tokenised securities, or security tokens, are the only form of cryptoassets capable of being classified as financial instruments under MiFID II, 2 the EU’s principal legislation on financial markets, products and services, but most other cryptoassets are not easily captured under existing financial services regulatory frameworks. MiCA sets out to create a harmonised legal framework across the EU and to fill the gap in existing EU financial services legislation whose scope has proven to be inadequate to address crypto activities, notwithstanding efforts in some EU jurisdictions to extend existing legislative frameworks to cover crypto activities and services. Lawmakers around the world may look to MiCA as a basis for their own legislative efforts to regulate crypto markets. It provides a substantial degree of the regulatory clarity that the crypto industry has long sought, which is particularly relevant given the recent bankruptcy filings in the crypto sector. MiCA is a landmark piece of legislation that heralds a new era of regulatory scrutiny of crypto markets. The Council, however, will only be able to formally approve MiCA once the Parliament has delivered its opinion following its first reading of the draft regulation. The Council’s announcement gives the Parliament a clear indication of the Council’s position regarding MiCA’s final compromise text. The latest agreed text of MiCA was published by the Council on 30 September 2022, following substantial negotiations between the EU’s three legislative institutions, i.e., the Council, the Parliament and the European Commission (the Commission). On 5 October 2022, the Council of the European Union (the Council) confirmed its intention to approve the draft legislative package, which includes MiCA, assuming the European Parliament adopts the draft package at first reading. The European Union’s proposed Markets in Crypto-assets (MiCA) regulation, 1 which includes new regulations for the classification, issuance and admission to trading of cryptoassets, as well as for the provision of services on crypto markets, is heading towards the final stages of its legislative approval process.
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