For those who follow the news on the regulation of cryptocurrencies in the world and in the EU, the news that the vote on MiCA has been postponed again until April did not come as a surprise. This time again, the delay is "technical" and, as explained in the European Parliament, is caused by problems with the translation of the almost 400-page file into 24 official languages of the EU countries.
The plenary session on the MiCA issue has already been postponed twice, in particular due to the same problems with translation. Experts believe that the postponement of the final vote will delay the development of technical standards by European financial regulators. On average, this can take 12 to 18 months after formal approval.
Several months ago, we already wrote about this bill in the article Regulation on Markets in Crypto-assets (MiCAR). Now we will understand the path that the draft law takes in the EU before it becomes law, and how it can affect the circulation of cryptocurrency in Ukraine.
MiCA (Markets in Crypto Assets) - a bill on the regulation of crypto assets in the EU.
According to the draft law, in order to combat money laundering, custodial service providers need to verify the identity of their clients when transferring funds. These rules will apply to issuers of unsecured cryptoassets, issuers of stablecoins, trading and custodial platforms.
Crypto-asset service providers (CASPs) are required to adhere to strict requirements aimed at protecting consumers. They can be prosecuted in case of loss of investors' funds.
For trading platforms, there is a requirement to provide a white paper (a document describing the main features and technical characteristics of a specific cryptocurrency or blockchain project) and sanctions for the use of misleading information.
For consumers, there are disclaimers mentioning the risks of losses associated with crypto-assets, for companies - the rules of marketing communications.
CASP will need authorization to operate in the EU. The largest cryptoasset service providers will be supervised by the European Securities and Markets Authority (ESMA).
The text of the MiCA document was published by the European Commission on September 24, 2020. In December 2021, the EU Council adopted a compromise text of the regulation. The text of the final proposal, which is sent for final approval by the European Parliament and the Council of the EU, must be agreed at the previous meetings of the EC, the European Parliament and the Council of the EU. Once the proposal is accepted, it will be published in the Official Journal of the EU and will enter into force within the period specified in the legislation.
Despite the fact that the provisions of MiCA after the final decision will apply to all EU countries, each country considers the cryptocurrency market both within the framework of European interaction and in relation to the local market.
For example, just a few days ago, the French authorities adopted new rules for the registration of crypto companies. France's National Assembly has passed a series of new regulations for the licensing and registration of cryptocurrency companies. The country's president, Emmanuel Macron, has 15 days to approve the document or send it for revision. If the bill is passed, the changes will enter into force in July 2023.
The draft law took on a different form than that envisaged in the first amendments. Local crypto companies will now be required to go through a more serious registration process than the French Financial Market Supervisory Commission (AMF) is currently proposing. Under the changes, applicants must comply with internal controls, cyber security and have a conflict of interest management system in place.
Circulation of cryptocurrency in Ukraine was legalized on March 15, 2022, when President Volodymyr Zelenskyi signed the law "On Virtual Assets". However, despite the adoption of the law, it has not yet become fully operational.
The Law "On Virtual Assets" provides for a comprehensive regulation of legal relations in the field of circulation of virtual assets in Ukraine and defines the rights and obligations of participants in this market and state policy in this area.
According to the Law:
The National Commission for Securities and the Stock Market was obliged to control the sphere of circulation of virtual assets.
Despite the formal adoption of the law "On Virtual Assets", it has not yet become fully operational. "For this, it is necessary to adapt the law to the Tax and Civil Codes. Therefore, the law will enter into force only after amendments are made to the Tax Code of Ukraine regarding the specifics of taxation of transactions with virtual assets," says O. Dubetskyy, advisor to the Minister of Digital Transformation of Ukraine on Virtual Assets.
He also noted that the National Securities and Stock Market Commission has been appointed as the market regulator, but "...the National Commission has never dealt with cryptocurrency, so it will have to involve experts in this field."
Ukraine aspires to become a member of the European Union, and the sooner we come to agreement on legislation, the closer we will be to joining the EU.
To legalize the Ukrainian market of cryptocurrencies, they can use the concept developed by the legislators of the European Union. Deputy Chairman of the Tax Committee of the Verkhovna Rada, Yaroslav Zheleznyak, believes that "MiCA can become a basic framework even outside the EU"
Zheleznyak emphasized that in Ukraine it is necessary to make the circulation of cryptocurrency legal and safe so that the market receives not regulation, but incentives for development and competitive advantages.
At the same time, there is an opinion that improving the laws on cryptocurrencies in Ukraine should be done after the end of the war.
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