All EU Member States unanimously pass MiCA, stablecoins and cryptocurrency exchanges to be regulated successively after it takes effect.

MiCA was first proposed in September 2020 and has undergone multiple amendments. The European Parliament's ECON and the Council successively approved MiCA in October last year, and the European Parliament also passed MiCA and the Regulation on Funds Transfers in April this year. The final hurdle, the "Economic and Financial Affairs Council EcoFin" of the EU, unanimously approved the MiCA bill on May 16. The world's first comprehensive crypto regulatory framework is about to be implemented, making the EU the first major jurisdiction with a comprehensive crypto regulation.

EU Unanimously Passes MiCA

Previously reported, the European Parliament passed the comprehensive regulatory framework for digital assets in the European Union, known as MiCA (Markets in Crypto Assets), with a vote of 517-38 on April 20. The legislation also passed the "Funds Transfer Regulation" with 529 votes in favor and 29 against, requiring cryptocurrency operators to identify their customers to prevent money laundering.

Following this, MiCA will need formal approval from all 27 EU member states to come into effect, which is seen as the final hurdle for the MiCA bill.

According to a press release from the European Council, all 27 member states of the Economic and Financial Affairs Council (EcoFin) of the EU unanimously passed the MiCA bill at their meeting on May 16.

Note: EcoFin consists of the finance and economy ministers of all 27 EU countries, with relevant EU commissioners also attending the meetings.

MiCA to Include Stablecoins, Exchanges a Year Later

Patrick Hansen, the European policy lead at Circle, tweeted about the procedures following the passage of MiCA:

1. The EU will issue an official announcement

2. The law will come into effect 20 days after passage

3. Stablecoin issuers will be regulated 12 months later

4. Crypto-asset service providers (CASPs) will be regulated 18 months later

For the full text of the MiCA bill and a comprehensive analysis by Patrick Hansen.

Impact of MiCA

Four Categories of Cryptographic Assets under MiCA

Under MiCA, securities-like cryptocurrencies are excluded from regulation to avoid duplication. According to Patrick Hansen's analysis, MiCA categorizes cryptographic assets as follows:

• Cryptographic assets: Transferred and stored using distributed ledger technology, covering most cryptocurrencies such as Bitcoin and Ethereum.

• Utility tokens: Tokens that can be used to access goods or services provided by issuers.

• Asset-referenced tokens (ART): Cryptocurrencies pegged to non-fiat assets.

• E-money tokens (EMT): Pegged to fiat currencies like USDC, USDT, or BUSD.

ART and EMT will be considered significant issuers if they meet the following criteria:

• Over 10 million holders

• Market value exceeding 5 billion euros

• Daily transactions and trading volume exceeding 2.5 million and 500 million euros

• Significance of the issuer internationally, including token payment and remittance applications

• Relationship of the token with the financial system

• Whether the issuer provides other ART, EMT, or cryptographic asset services

Will NFT Tickets be Regulated?

Patrick Hansen suggests that typical "10,000 NFT projects" in the NFT market are likely to fall within MiCA's regulatory scope, meaning issuers must comply with relevant disclosure and compliance requirements. NFT trading markets and custodians may also be considered as crypto-asset service providers (CASPs).

Will issuing 10,000 concert tickets in NFT form also be regulated? Possibly. Patrick Hansen believes that EU regulatory authorities will provide more clarity on this in the future.

Cryptographic Asset Issuers: Standard Whitepaper Format, Retail Investors Can Withdraw Funds in 14 Days

Utility tokens and small-scale cryptographic assets are not subject to this requirement. Within a year, the EU will establish a whitepaper format, and cryptocurrency issuers must comply with the following regulations:

• Whitepapers must include issuer information, token economics, consensus mechanisms, environmental impact disclosures, and conflict of interest disclosures.

• Issuers must notify national regulators 20 days before releasing whitepapers, and authorities may prohibit issuance.

• Retail investors have 14 days to withdraw their investment.

Asset-Referenced Tokens (ART) and E-Money Tokens (EMT)

ART and non-euro EMT can be understood as stablecoins with politicized and controversial terms. If transactions and trading volumes within the euro area exceed 1 million and 200 million euros respectively, issuers must cease issuance.

Furthermore, MiCA seems to give traditional financial institutions enough competitiveness. Financial institutions regulated under the EU's MiFID financial regulations do not need a MiCA license to provide relevant cryptographic services; they only need to notify regulators and demonstrate their technical capabilities.

MiCA to Expand Europe's Leading Position in Cryptography

As of now, the MiCA bill has revealed many details, further proving the claim by SEC Chairman Gary Gensler that separate regulations for cryptocurrencies are unnecessary. Apart from becoming the first major jurisdiction with comprehensive cryptographic regulations, the European Union is also pointed out by Patrick Hansen to have a higher proportion of crypto-friendly European banks. With the implementation of MiCA, Europe's leading position in the cryptographic field may further expand.