Crypto is not a new concept to anyone in this time and age - still, many people seem lost in it. A lot think they have the right grasp until they go into the market and are confused. Safe to say, the crypto world is quickly becoming a busy city with no clear traffic rules, making it difficult to navigate safely. So, what if we had a framework that made things clearer and rules simpler to grasp for everyone?
MICA, short for Markets in Crypto-Assets, is that framework for you. Thanks to the European Union, this has been created to help crypto make sense to every crypto enthusiast. Think of this framework as a rule to help guide people to take better trades and manage businesses in crypto.
With MICA, crypto traders and enthusiasts can manage risks, access opportunities, and enjoy fair exchange in the world of crypto.
What Does MICA Cover?
In the pursuit of fairness and ensuring no one gets hurt, the framework focuses on three types of assets:
Asset-referenced tokens (ART)
Ever wondered if a token’s value can be tied to currencies and physical assets? ART’s token is tied to physical assets like gold, and to currencies like dollars, pounds, and euros.
Electronic Money Tokens (EMT)
Unlike ART, EMT is a simpler token, and here is why; instead of being tied to more than one asset, EMT’s values are tied to only one currency, like the US dollar. And yes, a good example of an EMT token is stablecoins.
Other Crypto-assets
Sometimes, the goal of a token under the MICA framework is not to be tied to currencies or physical assets, but to give people access to certain services. Imagine being able to access a special app or network because you have a token. Well, it is possible with this – and it is called utility tokens.
Guidelines for MICA
MICA was created to ensure that people and companies participating in the crypto space follow the same guidelines, and here are some of the rules:
Registration
Under this framework, MICA ensures that a token is to be considered valid only if it secures the relevant licenses from authorities. Crypto businesses, whether they issue tokens, exchange them, or offer wallet services, will also need to be registered.
There are guidelines to follow for every ARTs or EMTs and all crypto-traders and businesses are under the obligation to follow these guidelines.
Transparency and Reporting
The framework also ensures openness and honesty in the crypto business. The more things in the crypto world become clearer, the better it is for crypto traders and businesses.
In terms of reporting, issuers like ARTs have to file quarterly reports and keep some assets for the future, so they can come to use when necessary.
Fraud Prevention
Without the fraud prevention framework, it is easy for people of big influence “Celebrities’ to weaponize their influence in the crypto world. Market abuse is real and MICA is trying to ensure traders stop falling victim to these shady deals through the Fraud Prevention rule.
Putting a system in place that easily catches bad actors and wrong influences as soon as they emerge will protect newbies in the business. This is necessary for the overall image of crypto in the world today.
What MICA Aims to Do
MICA did not appear out of thin air. It was a framework designed to combat the confusion with crypto and manage the excitement for newbies. The EU wanted to create a safer environment where innovation can thrive, and it makes sense that the following are the things MICA aims to achieve:
Protecting investors
Investors are important to keep the crypto business running so, a framework like MICA has guidelines that protect them. To do this, MICA sets guidelines to prevent scams and fraud.
Tackling Financial Crime
To date, some people still believe that crypto is a cover for shady business. Ask some random man on the street, and he probably believes crypto-traders are fraudsters. So, of course, the goal is to ensure transparency to help fight against fraud in crypto.
Managing Stable coins
Stable coins without proper management set us back – it is one of the fastest ways to disrupt the economy. So, of course, MICA’s goal is to supervise coins like ARTs and EMTs to ensure stability.
Encouraging Innovation
Any industry with protective laws and rules for all partakers inspires more people to join. With clearer rules about Crypto, more people and businesses innovate and participate without worrying about safety.
How Does It Affect Crypto Businesses?
MICA’s framework aims to make the business more palatable to everyone, and since it's being endorsed in the industry, crypto traders and businesses can expect changes in the way the business evolves moving forward.
Businesses will now be registered to be considered legitimate.
Businesses will follow certain requirements – this is to ensure that everyone is under equal law and is being treated fairly. Whether it is a big or small company, MICA will ensure that all businesses meet certain requirements before they are accredited.
Permission from authorities - The implementation of MICA’s rules means that people can no longer just bring a coin out of the blue. All coins will be investigated by the body and permission will be taken before a coin becomes viable in the market.
Anticipate the coming of MICA
Markets in Crypto-Assets was signed into law in 2023, and is set to roll out over a two-year span. According to the plan, implementation kick started in June 2024 with the full-blown implementation in 2025. To remain a key player in the European crypto space, we recommend familiarizing yourself with these new guidelines.
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