The final versions of MiCA and TFR have now been finalised for the regulation of cryptocurrencies in the European Union, and will come into force next year. This is therefore an opportunity to review the key points of this legal framework.
The definitive versions of MiCA and TFR
Markets in Crypto-Assets (MiCA) and Transfer of Funds Regulation (TFR): two important strands of cryptocurrency regulation in Europe that have been much talked about in recent years.
Over time, these bills have evolved, sometimes raising serious fears about competitiveness, as with the spectre of a ban on mining, before such a possibility was abandoned.
The final texts of MiCA and TFR are now in place, and will remain unchanged in this first version, coming into force in 2024:
DEFINITIVE VERSION This time, there is no turning back.
The MiCA and TFR regulations have been passed.
But what’s really changing?
KYC from €1,000, 1:1 reserve, Transfer blocking, DeFi wallet… pic.twitter.com/7yDeD7RoRp
– Waltio (@Waltio_co) May 17, 2023
While some aspects of these regulations may divide, the fact is that the European Union (EU) is leading the way in regulating crypto-assets. While other world powers, such as the United States, are conspicuous by their lack of coordination and the vagueness they bring to the ecosystem, Europe could more easily attract Web3 players thanks to this clear framework.
Key points to remember
When transfers are made between two centralised platforms, TFR implies strict anti-money laundering and combating the financing of terrorism (AML/CFT) rules.
When a transfer is made, the sending platform must send the receiving platform the full name, address, date and place of birth, the amount of the transaction and its destination, as well as the customer’s account number. In return, the destination platform must send the customer’s full name, address and account number.
In the case of a transfer to a self-hosted wallet from a centralised platform, the user will have to comply with the same rules as those mentioned above for issuing platforms. In addition, TFR does not apply to transfers between two self-hosted wallets.
MiCA has introduced the status of crypto-asset service provider (CASP). This status is similar to that of digital asset service provider (PSAN) in France, and will be regulated by the European Securities and Markets Authority (ESMA).
For the moment, non-fungible tokens (NFTs) are not concerned. These will be addressed at a later stage, but other classes of crypto-assets will indeed be subject to new standards.
Stablecoins, for example, will have to be collateralised on a one-to-one basis, even algorithmic ones. In addition, the issuance of new cryptocurrencies will be supervised by ESMA and the European Banking Authority (EBA):
3️⃣ Creation of new cryptocurrencies
The issuance of a new crypto will be more supervised, plus ESMA and EBA will be able to restrict the issuance of new tokens if necessary.
– Waltio (@Waltio_co) May 17, 2023
It should also be noted that CASPs will be considered liable in the event of losses during hacks or internal errors concerning their customers’ cryptocurrencies. This therefore implies a segregation of funds between their assets and those of investors.
In addition, a compliance period should be accepted until the players in the ecosystem can implement these new rules.
