The Markets in Crypto-Assets Regulation (MICA) and the EU Digital Finance Strategy

33 Pages Posted: 11 Nov 2020 Last revised: 11 Dec 2023

See all articles by Dirk A. Zetzsche

Dirk A. Zetzsche

Universite du Luxembourg - Faculty of Law, Economics and Finance; European Banking Institute

Filippo Annunziata

Bocconi University - Department of Law; European Banking Institute; Ca Foscari University of Venice; Bocconi University - Baffi Carefin Centre; Frankfurt School of Finance & Management; EUSFIL Jean Monnet Centre of Excellence

Douglas W. Arner

The University of Hong Kong; The University of Hong Kong - Faculty of Law

Ross P. Buckley

University of New South Wales (UNSW) - UNSW Law & Justice

Date Written: November 5, 2020

Abstract

The European Commission published its new Digital Finance Strategy on 24 September 2020. One of the centrepieces of the Strategy is the draft Regulation on Markets in Crypto-Assets (MiCA), designed to provide a comprehensive regulatory framework for digital assets in the EU.

With MiCA the EU Commission has proposed bespoke regulation for utility tokens and stablecoins including payments tokens, asset-backed tokens and “significant” stablecoins (including “global stablecoins”). As to investment and securities tokens, the EU Digital Finance Strategy relies on the existing body of EU financial and securities law, with the Prospectus Regulation, the MiFID framework as well as the UCITSD and AIFMD at its core, with the intention to incorporate necessary changes as part of the existing ongoing amendment and review processes. MiCA provides for a bespoke prospectus regime for crypto-assets, with the issuing of e-money tokens (i.e. payment tokens), asset-referenced tokens (also known as stablecoins) and crypto-asset services being regulated activities subject to licensing. While supervision of crypto-asset service providers (CASPs) will rest with national authorities, supervision of significant asset-referenced and e-money tokens will rest mainly with the European Banking Authority.

The EU Digital Finance Strategy marks a very important step for the EU in developing both innovation and the Single Market. At the same time, while MiCA is an ambitious legislative project, there is room for improvement. First, the scope of MiCA remains uncertain as the draft MiCA does not clearly delineate between utility tokens subject to MiCA and investment tokens subject to EU securities law. Second, a systematic approach to EU law is absent. Thresholds and concepts known from other EU laws should be firmly embedded in MiCA. Third, a framework for supervisory cooperation with regard to truly global stablecoins is missing.

Keywords: Digital Finance, Eu Digital Finance Action Plan, MiCA, Cryptoassets, Stablecoins, Payment Tokens, Currency Tokens, Utility Tokens, Securities Token, Investment Tokens, MiFID, prospectus regulation, Initial Coin Offerings, FinTech, financial law, securities law

JEL Classification: K22, K23, K24, L86

Suggested Citation

Zetzsche, Dirk Andreas and Annunziata, Filippo and Annunziata, Filippo and Arner, Douglas W. and Buckley, Ross P., The Markets in Crypto-Assets Regulation (MICA) and the EU Digital Finance Strategy (November 5, 2020). European Banking Institute Working Paper Series No. 2020/77, University of Luxembourg Law Working Paper Series No. 2020-018, University of Hong Kong Faculty of Law Research Paper No. 2020/059, Available at SSRN: https://ssrn.com/abstract=3725395 or http://dx.doi.org/10.2139/ssrn.3725395

Dirk Andreas Zetzsche (Contact Author)

Universite du Luxembourg - Faculty of Law, Economics and Finance ( email )

Luxembourg, L-1511
Luxembourg

HOME PAGE: http://wwwen.uni.lu/recherche/fdef/research_unit_in_law/equipe/dirk_andreas_zetzsche

European Banking Institute ( email )

Frankfurt
Germany

Filippo Annunziata

Bocconi University - Department of Law ( email )

Via Roentgen, 1
Milan, Milan 20136
Italy

European Banking Institute ( email )

Frankfurt
Germany

HOME PAGE: http://ebi-europa.eu/bodies-of-ebi/academic-board/

Ca Foscari University of Venice ( email )

Dorsoduro 3246
Venice, Veneto 30123
Italy

Bocconi University - Baffi Carefin Centre ( email )

Via Roentgen 1
Milan
Italy

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

EUSFIL Jean Monnet Centre of Excellence ( email )

Italy

Douglas W. Arner

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

HOME PAGE: http://hub.hku.hk/rp/rp01237

Ross P. Buckley

University of New South Wales (UNSW) - UNSW Law & Justice ( email )

Sydney, New South Wales 2052
Australia

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