MiCA 2.0 Talked About in E.U. Before Execution of First One

E.U.’s much-awaited Market in Crypto Asset (MiCA) regulations will be effective from June 29, 2023, but policymakers are already calling for MiCA 2.0. The comprehensive regulatory framework was published in the Official Journal of the European Union (OJEU) on June 9, 2023, and was scheduled to take effect within 20 days from the date of publication.

Is the Time Right for MiCA 2.0?

With its implementation on June 29, the regulations would require crypto firms operating in the E.U. to comply with the requirements and apply for licenses. As per the information, a firm shall take around five months to obtain operating permission. Experts argue that firms must be proactive rather than reactive in adopting the regulations.

To obtain the license under the market in crypto asset regulations, they would have to apply with the overseeing authority in their region of operation, which would take around 25 working days to notify the applicants about missing documents or other such information. Additionally, whether accepted or not, the application status will be announced in 60 days. The license would have an added benefit, allowing the firm to operate across the E.U. using a single document.

Some rules will be effective from June 29, but select regulations regarding stablecoins will come into effect by June 2024. The rest of the package will be effective from December 30, 2024. As the European crypto industry is still working on implementing regulations, talks regarding its next version are already circulating.

During an event in Paris last week, Francois Villeroy de Galhau, Governor of the Bank of France, said that lawmakers should start working on MiCA 2.0 as this upgrade would help to better regulate the crypto industry. Christine Lagarde, President of the European Central Bank, also said that this step would help cover the blind spots like staking, lending, and decentralized finance (DeFi).

It would take another 18 months for every Market in Crypto Asset rule to be implemented. A detailed report on its working and loopholes, if any, shall arrive a bit later. The work on the next version will begin after complete execution and detailed analysis of the regulatory framework. For now, the whole emphasis of the authority would be on being the first primary jurisdiction to have a regulatory framework.

Laura Chaput, head of regulatory compliance at market maker Keyrock, argued that lawmakers must first carefully evaluate the implementation of regulations, and analyze its pros and cons before deciding to work on its next iteration. Furthermore, the industry must adopt the first version to attain full effectiveness. Only after that should the authorities start work on the next version.

The European Union has started a multi-layer consultation process inviting industry experts’ insight on the regulations. The procedure shall commence in July 2023. The European Securities and Markets Authority (ESMA) released a consultation package on June 12, 2023.

It seems too early to wait for the Market in Crypto Asset version 2.0, as the authorities must first successfully implement the original version. Its strict scrutiny and analysis would reveal certain loopholes and blindspots, and then efforts could begin toward building the next version.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing