The law was created to create a uniform regulatory environment within the European Union and end the fragmentation that arose as countries applied their own rules to crypto. MiCAR brings, among other things, greater transparency, consumer protection and financial stability to a sector that has long been largely unregulated.
Why MiCAR?
The aim of MiCAR is to create a clear framework for crypto service providers and issuers of crypto assets. This means that companies operating within the EU must meet strict requirements in terms of capital, risk management and transparency. This will raise the threshold for rogue parties and give investors more confidence in the sector. This regulation will make the market more accessible and secure, allowing not only private investors but also institutional players to move more safely in the crypto world.
What is the impact of MiCAR?
The impact of MiCAR is significant. Crypto exchanges, brokers and other service providers must register as Crypto Asset Service Providers (CASPs) and meet the set capital and compliance requirements. In addition, stablecoin issuers will be subject to strict supervisory rules, with a distinction between Asset-Referenced Tokens (ART) and E-Money Tokens (EMT). This means that stablecoins that are widely used within the EU, such as USDC and USDT, will have to meet liquidity and capital requirements and align their operations with European regulations. A major consequence is that some crypto exchanges will no longer be able to offer certain stablecoins within the EU, leading to a restructuring within the market.
Want to learn more about how stablecoins work and why they’re so important? Read our in-depth article on: stablecoins.
What’s the impact of MiCAR beyond crypto?
Beyond its direct impact on crypto service providers and stablecoins, MiCAR also has broader implications for the financial sector as a whole. Banks and traditional financial institutions will now have a clearer framework on how they can integrate crypto assets into their services. This could lead to increased adoption of crypto within mainstream financial products, such as mutual funds or payment systems. At the same time, it is expected that companies that are unwilling or unable to comply with MiCAR regulations may relocate to non-EU jurisdictions, which could impact the competitive dynamics within the sector.
In the end
While MiCAR is seen as a challenge by some due to the additional obligations and costs it entails, it is also seen as an essential step towards the maturity of the crypto sector. Clear regulations will allow companies to operate with stability, improve investment protection, and increase the adoption of crypto assets within the broader financial sector. The law not only offers stricter requirements, but also new opportunities for innovation and further integration of crypto into the regular economy.
