The crypto asset market regulation (MiCA) will be applied from mid-2024 and each EU Member State is required to develop its own national regulation. If Latvia is the first to adopt it, we have a great chance to stand out at the European level with our offer.
On 20 April 2023, the European Parliament adopted the MiCA Regulation, which is designed to promote and support the potential of digital finance for innovation and competition, while mitigating risks. This regulation is being developed in line with the European Commission’s priorities to make Europe fit for the digital age and to create a future-ready economy and financial system that works for the benefit of citizens.
Among other things, MiCA will set out the requirements for licensing and supervision of crypto asset service providers. The licence will be required to provide various crypto asset services in the EU, such as holding crypto assets, exchanging crypto assets for official national currency or other crypto assets. A crypto asset service provider licensed in one EU country will be entitled to provide crypto asset services throughout the EU.
Finally there will be more clarity
Agneta Rumpa, Senior associate at Sorainen
Agneta Rumpa, senior associate at Sorainen, is also positive about this regulation. “This will be a great change for Latvia, as we have not had a comprehensive regulation for virtual assets. Now, whether we want it or not, we will have to create it,” she says. Until now, the industry has not been regulated or there was no clarity about how it is regulated. Now the uncertainty will disappear. In reality, the system will be similar to the current one for financial instruments – just a little simpler,” says A. Rumpa.
But that doesn’t mean everything will be very simple. There will be crypto industry companies that will be subject to classical financial regulation, for example if they work with crypto assets. “If they count as financial instruments, they are not subject to the new MiCA rules and are subject to the existing rules on financial instruments. Similarly, tokens that are considered e-money will not be covered by the new regulation – they will also be covered by the existing e-money framework. In practice, there will therefore be plenty of challenges, such as understanding which regulation applies to particular crypto assets or crypto asset service providers. But anyway, the adoption of MiCA is a step in the right direction,” says A. Rumpa.
On the same starting line
Rūdolfs Enģelis, Partner at law firm Sorainen and attorney at law
“We are now in a situation where all of Europe is roughly on the same starting line. Every country has the chance to be the first. The one that can show the market the fastest that it is ready to issue the first licences under the MiCA framework and convince companies that it is faster, easier, friendlier to get them in the country will become the leader. This gives us the opportunity to make all the preparations in time to be as ready as possible when the licences can be issued. The race is now on to see which country will be the first to implement the MiCA Regulation nationally” says R. Eņģelis. In his view, both Latvijas Banka and the Ministry of Finance understand this and are working on it.
R. Eņģelis adds that not all European countries are so ambitious. As far as he knows, Estonia and France are already working on the regulation, but others are hesitant to be the first with the national regulation.
You can read the whole article here.