The Cyprus Securities and Exchange Commission (CySEC) has launched a consultation to gather market feedback on the proposed fees and reporting requirements under the Markets in Crypto-Assets Regulation (MiCA). The initiative invites stakeholders to provide input and influence the future framework, with responses due by July 17, 2024.
MiCA Regulatory Framework
MiCA aims to establish a unified regulatory framework for crypto-assets across Europe. It targets crypto-assets that are fungible but do not fall under financial instruments. The regulation, effective from May 31, 2023, is designed to create clarity and consistency in the cryptocurrency market.
The regulation categorizes crypto-assets into three main types: asset-referenced tokens, e-money tokens, and other crypto-assets. Additionally, MiCA introduces new categories of entities that will be supervised by CySEC, including providers of crypto-assets, issuers of ARTs (excluding credit institutions), and crypto-asset service providers.
The MiCA regulations have already led to significant changes in the industry. This month, Binance announced plans to make changes to ensure compliance in the financial, banking, investment, and insurance sectors. Compliance refers to adhering to rules or orders set by government regulatory agencies when providing services or processing transactions. Financial compliance also involves following established guidelines or standards and may include efforts to ensure organizations comply with industry regulations and government legislation. Understanding compliance is essential when trading on a rewards platform. Under the MiCA framework, only regulated companies can issue and provide stablecoins. Cryptocurrency exchanges have stated that many existing stablecoins on Binance do not meet these standards and will be designated as unauthorized stablecoins.
MiCA in Effect
Meanwhile, ESMA has developed a comprehensive plan to address cryptocurrency-related risks and establish a regulatory framework for digital assets under MiCA. These measures include authorization, governance, conflict resolution, and complaint handling procedures, aimed at strengthening the crypto ecosystem.
The first scheme will be launched in July 2023, involving notification content, authorization applications, and complaint handling procedures.
MiCA has yielded positive results in the digital assets space. According to a report by global identity intelligence company AU10TIX, fraud activity has significantly decreased by 51% in the cryptocurrency space, signaling a move away from fraudulent activities due to the implementation of the Markets in Crypto-Assets (MiCA) regulatory regime. Like any other high net worth industry, the financial services industry is subject to strict regulation to help curb illegal activities and manipulation. Each asset category has its own set of protocols to combat abuses in their respective forms. In the forex space, regulation is carried out by authorities in multiple jurisdictions, although there is ultimately a lack of binding international order. Who are the primary regulatory bodies in the industry? Regulatory bodies such as the UK Financial Conduct Authority (FCA) (read this term).
Furthermore, the report also reveals how regulatory crackdowns in the digital assets space have diverted fraudsters towards the payment industry. The report highlights that fraud in the payment industry has increased by 56%, driven by factors such as increased digital transaction volume in the Asia-Pacific region and economic recovery in North America.
