Markets in Crypto-Assets Regulation (MiCAR)

The Markets in Crypto-Assets Regulation (MiCAR) introduces a new regulatory framework for European crypto-assets. MiCAR aims to protect consumers and investors and mitigate risks to financial stability.

Issuers of Asset Reference Tokens (ARTs) and E-Money Tokens (EMTs)

MiCAR will bring issuers of certain types of crypto-assets into the regulatory framework. Specifically, MiCAR will establish new rules for those types of crypto-assets known as "stablecoins" including Asset-Referenced Tokens (ARTs), E-Money Tokens (EMTs) and utility tokens.  As defined by MiCAR:

  • ARTs reference multiple currencies, commodities or other crypto-assets
  • EMTs reference a single official currency
  • Utility tokens provide access to a good or service supplied by the issuer of that token.

When MiCAR becomes applicable, issuers of ARTs and EMTs will have the following regulatory obligations: 

  • A requirement to be authorised by the Central Bank and to publish a white paper containing information on the relevant ART/EMT for investors
  • Conduct and governance requirements around marketing, disclosure of information and dealing with conflicts of interest
  • Prudential requirements to ensure sufficient liquidity and the ability to meet redemption requests.

MiCAR recognises that some ARTs or EMTs may be significant due to their size and other factors and as a result may present an increased risk. Accordingly, the European Banking Authority (EBA) will have supervisory responsibilities for issuers of significant ARTs and EMTs.

Crypto-Asset Service Providers (CASPs)

CASPs shall require authorisation in order to operate within the EU. The types of services covered by MiCAR comprise of:

  • The operation of a crypto-asset trading platform
  • Custody and administration of crypto-assets on behalf of clients
  • Exchange of crypto-assets for funds/other crypto-assets
  • Execution of orders for crypto-assets on behalf of clients
  • Receiving and transmitting orders for crypto-assets on behalf of clients
  • Placing of crypto-assets
  • Providing transfer services for crypto-assets to third parties
  • Providing advice on crypto-assets
  • Portfolio management on crypto-assets on behalf of clients.

At a high level, CASPs authorised under MiCAR will be subject to organisational, conduct and prudential requirements.

CASPs will have to meet requirements in relation to governance and have clear policies regarding safe-guarding of funds, business continuity, complaint handling, management of conflicts of interest and outsourcing. From a conduct perspective, CASPs will be required to;

  • Act honestly, fairly and professionally in accordance with the best interest of their clients and perspective clients
  • Provide information that is fair, clear and not misleading with marketing communications clearly identified
  • Communicate clear warnings regarding risks associated with transactions in crypto-assets
  • Meet prudential requirements including holding certain amounts of capital in the form of either own funds or an insurance policy.

Market abuse

MiCAR also introduces new rules that prohibit market abuse related to any type of crypto-asset transaction or service, including unlawful disclosure of inside information, insider trading and actions that are likely to lead to disruption or manipulation of crypto-assets.

Finalisation of MiCAR

MiCAR was published in the Official Journal of the European Union on 9 June 2023.

  • MiCAR will become applicable for issuers of ARTs and issuers of EMTs on 30 June 2024
  • MiCAR will become applicable for issuers of utility tokens and CASPs on 30 December 2024
  • A transition period is provided for CASPs operating within national law prior to the date of application (18 months after entry into force) or until authorisation has been granted, whichever is sooner.  There is a Member State discretion to not apply or reduce the transition period. The Department of Finance has consulted on the length of the transition period, this consultation is now closed.

Level 2 and Level 3 Text

The European Supervisory Authorities (ESAs) continue to develop level 2 and 3 texts which, when finalised, will provide greater granularity on the provisions in MiCAR. These texts are important as they will provide detailed specifications of key obligations for firms, including applicant firms seeking CASP authorisation and detail regarding the supervisory responsibilities of National Competition Authorities (NCAs) etc.

The ESAs have commenced consulting with stakeholders regarding the development of level two and three texts. 

See further information available on ESMA’s 3 MiCAR consultation packages and the EBA’s approach to its MiCAR policy mandate.

Firms should regularly monitor EBA and ESMA websites for updates on consultations.

Supervisory convergence in the MiCAR transitionary phase

The EBA also issued a statement, which encourages timely preparatory steps  towards the application of MiCAR to ARTs and EMTs. The statement includes guiding principles for firms, which are carrying out or considering carrying out ART/EMT activities in the period prior to 30 June 2024. 

ESMA has also published a statement in which it notes that full MiCAR rights and protections will not apply to the provision of crypto-asset services until December 2024. ESMA also encourages preparations for a smooth transition to MiCAR across all EU Member States.

Additionally in a letter addressed to the Economic and Financial Affairs Council (ECOFIN), ESMA Chair, Verena Ross, outlines that coordinated action from EU Member States will be paramount to ensure the smooth, convergent, and effective application of MiCAR.

Firstly, ESMA notes that NCAs will need to establish as early as they can, supervisory procedures related to the authorisation regime set out in MiCAR. Secondly, ESMA are concerned that extensive use of the transitional period for entities already providing crypto-asset services in the European Union would weaken the effectiveness of the MiCAR rulebook and so ESMA invites Member States to consider reducing the transitional period for entities that are already providing crypto-asset services from eighteen to twelve months.

Central Bank’s preparation

The Central Bank will be designated as the NCA for the authorisation and supervision of entities that will be subject to MiCAR.

The Central Bank encourages firms that may provide services or products under MiCAR to engage with the Central Bank at their earliest convenience.

The Central Bank has commenced its preparation for the implementation of MiCAR and has established a cross-sectoral team to integrate MiCAR into the Central Bank’s supervisory and authorisation processes and methodologies. The Central Bank will issue further communications regarding the authorisation and notification processes in due course. Additionally, the Central Bank will continue to monitor developments related to crypto- assets in order to assess any risks to consumer protection and financial stability.

Consumer information related to crypto assets is available on our consumer hub.