Is the MiCA regulation a breakthrough in the financial world
Seeing the rise of cryptocurrencies and tokenisation, the European Union has adopted a regulation that sets out a comprehensive legal framework for the issuance of crypto-assets and the provision of related services. It can be expected that the MiCA (Markets in Crypto-Assets) regulation will not only raise the level of security of this type of investment, while increasing consumer protection, but also pave the way for a wider implementation of blockchain technology in financial markets, to the benefit of all.
It is clear that the to date regulations in place have proven insufficient, primarily due to the lack of harmonised and sufficiently precise rules in various EU countries resulting in an inconsistent approach and regulatory arbitrage in the context of crypto-assets. However, this is set to change, mainly through the establishment of precise rules for the information and protection of customers, as well as the introduction of licensing of entities involved in the issuance or trading of cryptocurrencies. This can also be expected to weed out rogue or unreliable players.
Cryptocurrency in practice
With the advent of the MiCA regulation, the financial sector is therefore facing a breakthrough resulting in a stronger synchronisation of traditional banking with solutions based on blockchain technology. The regulation thus governs three types of crypto-assets which, in the near future, may become increasingly common:
- Tokens (Asset Referenced Tokens) are linked to a basket of official currencies, cryptocurrencies, commodities, or a combination thereof. Examples of ARTs include Diem, a would-be stablecoin by Facebook
- Electronic money tokens (EMT’s), whose value is linked to the exchange rate of an official currency such as PLN or EUR. The best-known example of an EMT is the USDC (based on the US dollar exchange rate).
- Utility tokens – represent a right of access to a good or service provided by the issuer (discount coupons, vouchers and vouchers)
How MiCA will affect existing regulation
The MiCA regulation establishes a new, comprehensive regulatory environment for the crypto-asset market across the European Union. To date, the existing legal framework has only partially addressed this, so it will be necessary to repeal certain provisions that are in conflict with current regulations and to grant specific supervisory powers to the relevant authorities, for example, the Financial Supervision Authority in Poland.
It is intended that the new provisions will be complementary to the existing regulations, further strengthening and supplementing them. Thus, the current regulations on consumer protection in the financial sector will remain in place, but MiCA will expand these to include supplementary protections specific to crypto-assets, such as information requirements on token issuers and trading platforms.
In addition, the MiCA regulation will work in tandem with current anti-money laundering (AML) and counter-terrorist financing (CFT) regulations, meaning that firms operating in the crypto-asset market will be required to apply the same AML/CFT standards as traditional financial institutions.
By establishing capital requirements and risk management procedures, MiCA will also complement existing financial stability regulations for crypto services firms.
MiCA and the Polish financial market
MiCA may have a significant impact on the Polish financial market.
As a result of the introduction of uniform Community regulations, entities operating in the cryptocurrency market will possess greater legal certainty over their activities, which should in turn increase interest in investing in our country. Indeed, clear rules and limited legal risk guaranteed by a more transparent regulatory environment may encourage foreign investors, contributing to increased competition and innovation on the Polish crypto-asset market.
The implementation of MiCA regulations may also significantly accelerate the wider use of crypto and blockchain, technology which is already being tested by banks and financial institutions. Indeed, the domestic financial sector is showing great potential and is determined to cooperate in this area, while uniform European standards and a reduction in regulatory arbitrage may further accelerate this trend. Moreover, customers in Poland are increasingly willing to use cryptocurrencies, appreciating their modernity and functionality when making payments or for investment purposes.
However, a number of issues still remain unresolved, such as the crypto-assets bill, which is still in the consultation stage. Given that there is limited time for its adoption, this may cause uncertainty among both companies and their clients.
In conclusion, the high potential of the Polish financial market in the field of crypto-assets should be highlighted, which may lead to its technological transformation and internationalization. In this context, the preferences of customers looking for increasingly modern solutions in banking, payments and investments will also be important. Ultimately, however, much will depend on the final shape of the crypto-assets law and the timing of its adoption.
Source: Contact Online 64 (159) 2024
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