What Challenges Does MiCA Pose for Institutional Adoption?

Recently, Talos and PolicyPartner hosted an "Institutional Adoption under MiCA" webinar which explored the implications of MiCA - Markets in Crypto-Assets Regulation. Anticipated to come into effect at the end of 2024, MiCA will reshape how digital assets are regulated and traded within the EU.

Here are the top three takeaways from the discussion:

Crypto service providers will need robust reporting systems

• One of the key themes discussed during the webinar was the compliance challenges that crypto businesses will face under MICA. With stringent reporting requirements expected to be part of the regulatory framework, crypto service providers must ensure they have robust systems in place to meet these obligations. 
• Additionally, the conversation highlighted the potential for enforcement actions if companies fail to comply with reporting deadlines or other regulatory requirements - underscoring the importance of proactive compliance measures.

MiCA could trigger scrutiny of algorithmic trading 

• Another important topic addressed was the oversight of algorithmic trading activities within the crypto industry. While MiCA does not have specific provisions regarding algorithmic trading, there is a consensus among panelists that certain requirements related to market abuse prevention could impact firms utilizing algorithmic trading strategies. 
• This includes implementing measures to prevent market manipulation and ensuring transparency in trading practices as regulatory discussions on market abuse and manipulation continue.  

‍E-money license requirements may hinder stablecoins

• Current stablecoin issuers must obtain e-money institution licenses. Given the limited number of e-money institutions currently operating within the EU, there are concerns about the feasibility of obtaining licenses within the proposed timeframe.
• This has prompted discussions around the possibility of grace periods for issuers whose license applications are pending, although regulatory authorities may face challenges in implementing such measures.

With MiCA poised to reshape the digital assets sector, the discussion reiterated that gaining a deeper understanding of its evolving intricacies is essential for businesses aiming to thrive in the EU market. 

For more information on upcoming regulatory events and webinars from Talos, visit our events page.