The MiCA magic 🧙🏜️
With the latest regulation in favour of crypto, will Europe open the doors for crypto companies of the world? Where does that leave America? 🇺🇸 < 🇪🇺
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The European Parliament gave MiCA a thumbs up last month. Ready to bring order to the wild world of crypto assets across the 27-country bloc.
If you don’t know already, MiCA stands for the Markets in Crypto-Assets Regulation, a rulebook for crypto in EU.
All set to become law in July 2023.
MiCA's got a clear mission: to wrangle the issuance, trading, and services related to crypto assets within the EU.
The result?
A crazy surge in crypto VC funding
What are the goals?
🌍 Creating harmonisation across the EU, closing regulatory loopholes, and saying goodbye to 27 different licenses & supervisors.
📚 Providing a clear rulebook for companies and institutions to enter crypto and enabling fair competition and innovation.
💪 Taking the global lead in crypto regulation and showing the world how it's done with early and comprehensive policy frameworks.
👾 MiCA brings in stricter rules for stablecoins, ensuring they have their stability cape on and implement robust risk management measures.
✋🏻 Mandates the implementation of anti-money laundering (AML) procedures.
🛡️ Stringent requirements for CASPs to protect consumer funds and maintain top-notch security protocols.
Basically protecting consumers from all things bad in crypto and counter fraudsters.
The categories of crypto assets that MiCA tackles
Electronic Money Tokens (EMTs): These tokens stabilise their value using the value of one single fiat currency, for example, USDC, BUSD, USDT or EUROC.
Asset-Referenced Tokens (ARTs): These tokens peg their value to something else, such as a basket of currencies, commodities, crypto-assets or other single non-fiat currency assets.
Other Crypto Assets: Any type of crypto asset that is not already covered by existing legislation. Most crypto-assets, including bitcoin and ether, should fall into this "catch-all" category.
Utility token: a sub-type of crypto-asset that only serves to provide access to a good or service provided by its issuer.
MiCA has a requirement
White papers for crypto issuers. Revealing issuer info, project details, token rights, and environmental impacts. The EBA and ESMA will define their format and content.
MiCA might have exclusions
CBDCs
NFTs
Digital assets that would qualify as transferable securities
World of NFTs
MiCA does not apply to non-fungible tokens (NFTs) explicitly. Actually, Its not really clear.
But, We find clues in the MiCA legislation. Art. 2(3) and Recital 10 suggest that NFTs should stay outside of MiCA's scope. But hold on, Recital 11 throws a curveball. If NFTs are issued in a "large series or collection," they might not be so non-fungible after all. Potential scrutiny on popular collections like Bored Apes and CryptoPunks.
World of DeFi
DeFi projects that are fully decentralised, without any intermediaries, are not the target of this regulation.
The tricky part is determining what level of decentralisation is necessary to stay out of MiCA's scope. The EU wants to prevent any regulatory loopholes, so the requirements will likely be high. DeFi projects that have a legal entity benefiting from the protocol, show fake governance decentralisation, or have central technical backdoors will struggle to prove they shouldn't fall under MiCA.
World of America
Is America stuck at the bar while the rest of the world is tearing up the dance floor? US and SEC are pretty rough on crypto, and the country's crypto firms are struggling while MiCA makes it easier for EU firms.
Coinbase is taking the SEC to court to clarify its stance on crypto; meanwhile, Kraken wants to invest in Europe because they find the US regulatory environment hard to figure out.
There's much for the US to learn from the EU, Dubai, Singapore, and South Korea. Even some members of the US House of Representatives think so 👇🏻
Maxine Waters, the ranking member of the House Financial Services Committee, said they're trying to create a whole new crypto market structure in the US because the regulators are just not getting their act together. Meanwhile, Wisconsin Representative Bryan Steil thinks Switzerland and Europe are way ahead with their "forward-thinking approach" to crypto. They have clear regulatory frameworks, while the US is still scratching its head.
Hester Peirce, someone from SEC who likes crypto, thinks that MiCA can inspire the US: "MiCA can serve as a model for us"
"I think that's something that we can learn from and draw from, but whether or not that will take a little longer for us, I don't know,"
TTD Week That Was 📆
The week of crypto running out of fuel and reality check for the meme coins.
Saturday: Crypto chills. Sports DAO. Travel embraces Web3 🎨
Friday: Meme coin < 30 seconds 🫣 🤑
Thursday: Here comes Canton ⚙️
Wednesday: Africa ❤️ Crypto 💔Africa
Tuesday: TDTY: Terra wreckage 🤕 🧯
Monday: Crypto rally hits breaks? ✋
TTD Week In Funding 💰
Blockworks $12 Million. The crypto media platform intends to use the funds to expand the product suite and research platform.
Artizen $2.2 Million. Web3 culture-focused platform to leverage tokenisation and gamification to crowdfund niche projects in the arts.
Odsy $7.5 Million. Develop the network ecosystem to provide a secure and programmable layer for all of Web3 through dynamic decentralised wallets.
Dolomite $2.5 Million. Build next-generation DeFi money market and decentralised exchange protocol.
Webb Protocol $7 Million. Zero-knowledge infrastructure that allows for private cross-blockchain asset transfers.
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