The Axioms of EU Crypto-Asset Regulation

Abstract

The EU is the first jurisdiction to comprehensively regulate the market in cryptoassets. Its MiCA Regulation (MiCAR) is designed to fill a lacuna that existed within the preexisting financial markets rulebook. MiCAR adopts a novel, technology-related regulatory approach as regards the design of the material scope of crypto-asset regulation. In particular, it defines two novel categories of regulatory product, ARTs and EMTs, commonly referred to as 'stablecoins'. The definitional approach reflects current market dynamics, which are characterised by significant detachment of investment decisions from economic and legal fundamentals. By contrast, the personal scope of MiCAR is designed following well-established strategies. This paper finds that, while the design of the scope of MiCAR is conducive to achieving its regulatory goals in principle, it opens significant room for legal uncertainty and regulatory arbitrage, thereby pushing definitional considerations from the rulemaking to the enforcement stage.

Keywords: EU, MiCAR, crypto-assets, stablecoins, ARTs, EMTs, regulation