Regulation
Here’s How EU Nations Are Preparing to Enforce MiCA
The European Union’s 27 member states are getting ready to enforce its landmark crypto laws this year – and businesses looking to operate in the bloc should be watching what national authorities are doing, policy watchers say.
In a few months, the Markets in Crypto Asset (MiCA) regulation’s specialized rules for stablecoin issuers will take effect, followed by licensing and other requirements for crypto firms broadly in December.
MiCA was voted into law in 2023 after the European governments spent three years developing the regulatory framework. Once effective, crypto firms, such as issuers, exchanges and wallet providers, will be able to operate throughout the European Union if they secure licensing in any single member nation.
That means each jurisdiction must transpose the bloc-wide EU regulation into local law, select which of their regulators will oversee crypto and prepare to authorize token issuers and other service providers.
For some EU countries – such as Germany, France and others – that chose to regulate crypto internally through strict regimes, transitioning to the MiCA age may not be a big shift. For some other countries, the change may be significant and place new burdens on local authorities.
CoinDesk reached out to regulators and government ministries in all 27 nations on their thoughts and progress on MiCA, 20 of whom responded by press time. These countries are in various stages of preparation.
At least 10 countries are finalizing or have already finalized local legislation. Some others are not quite as far ahead yet, but experts say there is time to get things in order.
MiCA is an EU-wide regulation, which means it takes direct effect across the bloc on the agreed deadlines, said Sophie Lessar, partner at law firm DLA Piper, focusing on fintech and digital financial services.
“The rules will come into effect. There’s nothing that any regulator will do to hold that up,” she said during an interview with CoinDesk.
However, there are some technical requirements that have to be implemented at a national level, Lessar added.
While national authorities decide how they want to implement some of the more flexible technical standards under MiCA – such as how long their grandfathering periods will last or what their supervision fee structure would look like – crypto businesses, too, should be preparing for compliance and be aware of nuances in implementation at the national level.
“The key thing is for people to navigate, what does that mean for my business? Where am I doing business? Are there any differences where there is the ability under MiCA for the national authorities to have slight differences in implementation?” Lessar said.
European countries are in various stages of transposing MiCA into local law, which can involve deciding on the local regulators who will be at the helm of supervising crypto – referred to as National Competent Authorities (NCA) in the MiCA text – as well as deciding on whether to take advantage of a transitional period allowed under the regime.
With MiCA, there was an expectation that local supervision duties might be divvied up between a country’s markets regulator and its central bank (to handle stablecoins), according to Marina Markezic, co-founder of the European Crypto Initiative (EUCI), which has been tracking the progression of national legislation.
France, for instance, has designated its financial regulator, the Autorité des marchés financiers (AMF) and banking authority, the Autorité de contrôle prudentiel et de résolution, as its MiCA supervisors under France’s Article 9 of Law no. 2023-171 of March 9, 2023, the AMF told CoinDesk.
Croatia is aiming for a similar setup where, once the national legislation is adopted, MiCA duties will be split between the Croatian National Bank and financial regulator Hanfa, the latter told CoinDesk.
“Hanfa will license and supervise the operations of crypto-assets service providers… However, as per MICA requirements, Hanfa will not approve crypto asset white papers,” the regulator said in a statement.
Some countries, such as Slovakia and Hungary, don’t have two financial regulators so crypto supervision will fall solely to their central banks, Markezic said. Hungary’s central bank MNB confirmed to CoinDesk that it was designated as the country’s crypto regulator through its national MiCA legislation.
Although this is more of an organizational matter, there could be room for regulators to be overburdened with licensing requirements.
Rosvaldas Krušna, adviser to the Board of the Bank of Lithuania, said that the new need for crypto firms to be approved “will bring significant challenges” to the central bank, which will be handling licensing.
“Given the fact that we have around 580 [crypto asset service providers] in Lithuania, the Bank of Lithuania initiated preparations well in advance, and we believe we are rather well prepared,” Krušna said. “We have put a lot of resources into preparation, both in terms of additional staff and tools required for supervision.”
Some countries with smaller financial markets may not have the need or capacity to hire a large number of new employees to work in their regulatory bodies, according to Policy Expert Anja Blaj at EUCI. As there’s not enough information about how many applications NCAs will receive individually, some states may find it hard to prepare ahead of time, she added.
“This also is kind of related to the overall, I would say, fragmentation in the way that European Union member states operate and the difference in the financial markets,” Blaj continued. “Because that is still something that is very member-state specific, even though we have many regulations, or much more regulations will be coming in this space, it’s still very much specific to the member state.”
Blaj and the EUCI team, who have been speaking with industry representatives in member states, say that each country’s crypto industry has its own concerns about implementation, proposed laws and who their NCAs are going to be.
Austria, Estonia, Denmark and Croatia are among the countries whose parliaments still need to approve draft national legislation to align with MiCA, according to what regulators told CoinDesk.
”The Danish Parliament is currently in the process of adopting national legislation that will mandate the Danish Financial Supervisory Authority (DFSA) to become the national competent authority with regards to MiCA in Denmark. This is expected to be adopted during the spring,” said Tobias Thygesen, head of the DFSA’s Fintech, Payment Services and Governance Division.
Croatia plans to adopt legislation implementing MiCA rules In the second half of 2024, the country’s financial regulator Hanfa told CoinDesk, while Portugal’s central bank said that the country has yet to designate a national competent authority.
Other nations such as Ireland, Slovenia, Poland and Lithuania have consulted publicly on draft legislation, CoinDesk was told by respective authorities in the country.
Regulators in Belgium, Bulgaria, Greece, Malta, Romania, Slovakia and Sweden did not respond by press time, while those in Italy and the Czech Republic declined to comment.
One area where nations can diverge in the implementation of MiCA is with their grandfathering period, or the time crypto firms are allowed to continue operating under old rules while transitioning to the new regime, Lessar said.
Crypto firms would need to navigate carefully between diverging transitional periods when beginning operations in the EU, she added.
Spain’s financial regulator, the National Securities Market Commission (CNMV), told CoinDesk that the country will apply a 12-month grandfathering period in which MiCA-authorized crypto firms and unauthorized ones will operate “at the same time.”
“This will be a relevant challenge for NCAs,” the CNMV said, adding that regulators will have to make a “big” effort to make the distinction clear to users. In preparation, the CNMV said it’s planning to hire 70 people to work on MiCA and the EU’s cybersecurity law known as DORA.
Finland hasn’t yet decided whether it will implement the transition period for crypto firms registered in the country because it is still preparing the national legislation, the country’s financial regulator FIN-FSA told CoinDesk.
“The legislative proposal must be passed by the Finnish parliament. The expectation is that the national legislation is adopted during [the first half of] 2024 still,” Elina Pesonen, market supervisor at FIN-FSA told CoinDesk in a statement.
Latvia’s central bank, Latvijas Banka, is planning to start the licensing process and accept applications on Jan. 1, 2025, after a six-month grandfathering period, Marine Krasovska, head of the bank’s financial technology supervision department, told CoinDesk. To make the process easier, it will pre-evaluate crypto firms interested in operating in the country, she added.
Dutch financial regulator AFM told CoinDesk that it has started accepting licensing applications from crypto firms starting April 22, 2024. If approved, the licenses will kick into effect when MiCA does on Dec. 30, 2024. The country’s central bank (DNB) will be handling stablecoin regulation, the AFM said.
From what Croatia’s Hanfa told CoinDesk, it might make use of the full 18 months of grandfathering.
“Based on the current draft law, all those listed in the Register (as at the end of 2024) will be able to use the MiCA transitional period for adjustment (up to June 2026) by the end of which they will have to align their operations and obtain a MiCA authorization from Hanfa to operate as crypto-asset service providers. Entities that did not provide crypto-asset services prior to the end of 2024, and want to start doing so after that date, will have to be licensed before they can provide such services,” Hanfa said.
Regulators that are licensing crypto firms for the first time are expecting an increased workload, and just as Spain’s CNMV is planning to hire new personnel, other regulators are also beefing up their teams or getting them the training needed to handle what’s coming.
“National competent authorities are already working hard to accommodate their capabilities and workforces to it,” Spain’s CNMV said.
Denmark’s DFSA will be accepting applications from companies as soon as the country finalizes national legislation, and the regulator has set up a “dedicated MiCA team responsible for the implementation,” Thygesen said.
“With the objective to effectively tackle the challenges posed by MiCA, the MNB has adopted multiple organizational changes and established a dedicated directorate focusing on MiCA related matters,” Hungary’s crypto regulator said.
Under MiCA, countries have a say in setting fee structures for licensing and compliance, said the EUCI’s Markezic, which would hopefully be more conducive to attracting and promoting businesses in the EU than deterring.
“Member states are pretty sovereign when it comes to their own financial markets. And they are their own markets, which means that they also, in a way, act in terms of like, ‘okay, I want now to have as many projects as possible coming to my ecosystem, because I have the ecosystem that can support it. And this is how I’m also competitive, in a way, competing with other members,’” Markezic said.
ESMA’s Chair Verena Ross described to CoinDesk the regulator’s role in implementing MiCA as bringing more detailed guidance to the market and bringing the regulators together.
It’s looking at June as an initial deadline for regulatory technical standards and guidance for public comments, with the end of the year as a deadline for finalization.
Policymakers in the EU are already thinking of revisions to MiCA that could see its scope expanded and certain rules tightened.
“MiCA is an important first step towards the regulation of cryptoasset services and their providers,” German crypto regulator BaFin told CoinDesk in a written statement. “It also provides for the further development of regulatory requirements, for example with regard to pooling, lending and staking, i.e. loaning cryptoassets for a fee. BaFin will play an active role in this process.”
Enforcement-wise, things largely seem to be moving along as they should be.
“So far the delegated acts and implementing rules are on track. Also, bear in mind that it is only the ‘stablecoin’ provisions (titles 3 and 4) of MiCA that kick in end of June,” Peter Kerstens, adviser to the European Commission on financial sector digitalization and cybersecurity, said in a statement to CoinDesk.
The rest is “a full summer and a full autumn and even some of winter away,” he added.
UPDATE (April 29, 1:58 UTC): adds detail to quote from EUCI’s Anja Blaj in the section titled ‘Picking watchdogs’ and clarifies Verena Ross is the Chair of ESMA. A previous version of this article referred to her as the Executive Director.
Amid the #EndBadGovernanceInNigeria protests in Nigeria, a notable shift is occurring within the country’s cryptocurrency sector. As the general public demands sweeping governance reforms, crypto community leaders are seizing the opportunity to advocate for specific regulatory changes.
Rume Ophi, former secretary of the Blockchain Stakeholders Association of Nigeria (SiBAN), stressed the critical need to integrate crypto-focused demands into the broader agenda of the protests.
Ophi explained the dual benefit of such requirements, noting that proper regulation can spur substantial economic growth by attracting investors and creating job opportunities. Ophi noted, “Including calls for favorable crypto regulations is not just about the crypto community; it’s about leveraging these technologies to foster broader economic prosperity.”
Existing government efforts
In opposition to Ophi’s call for action, Chimezie Chuta, chair of the National Blockchain Policy Steering Committee, presents a different view. He pointed out The Nigerian government continued efforts to nurture the blockchain and cryptocurrency industries.
According to Chuta, the creation of a steering committee was essential to effectively address the needs of the crypto community.
Chuta also highlighted the creation of a subcommittee to harmonize regulations for virtual asset service providers (VASPs). With the aim of streamlining operations and providing clear regulatory direction, the initiative involves cooperation with major organizations including the Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN). “Our efforts should mitigate the need for protest as substantial progress is being made to address the needs of the crypto industry,” Chuta said.
A united call for support
The ongoing dialogue between the crypto community and government agencies reflects a complex landscape of negotiations and demands for progress.
While actors like Ophi are calling for more direct action and the inclusion of crypto demands in protest agendas, government figures like Chuta are advocating for recognition of the steps already taken.
As protests continue, the crypto community’s push for regulatory reform highlights a crucial aspect of Nigeria’s broader fight to improve governance and economic policies. Both sides agree that favorable regulations are critical to the successful adoption and implementation of blockchain technologies, signaling a potentially transformative era for Nigeria’s economic framework.
Read also : OKX Exchange Exits Nigerian Market Amid Regulatory Crackdown
Slovenia, a small but highly developed European country with a population of 2.1 million, boasts a rich industrial history that has contributed greatly to its strong economy. As the most economically developed Slavic nation, Slovenia has grown steadily since adopting the euro in 2007. Its openness to innovation has been a key factor in its success in the industrial sector, making it a prime destination for cryptocurrency enthusiasts. Many believe that Slovenia is poised to become a powerful fintech hub in Europe. But does its current regulatory framework for cryptocurrencies support such aspirations?
Let’s explore Slovenia’s cryptocurrency regulations and see if they can propel the country to the forefront of the cryptocurrency landscape. My expectations are positive. What are yours? Before we answer, let’s dig a little deeper.
1. Cryptocurrency regulation in Slovenia: an overview
Slovenia is renowned for its innovation-friendly stance, providing a supportive environment for emerging technologies such as blockchain and cryptocurrencies. Under the Payment Services and Systems Act, cryptocurrencies are classified as virtual assets rather than financial or monetary instruments.
The regulation of the cryptocurrency sector in Slovenia is decentralized. Different authorities manage different aspects of the ecosystem. For example, the Bank of Slovenia and the Securities Market Agency oversee cryptocurrency transactions to ensure compliance with financial laws, including anti-money laundering (AML) and terrorist financing regulations. The Slovenian Act on the Prevention of Money Laundering and Terrorist Financing (ZPPDFT-2) incorporates the EU’s 5th Anti-Money Laundering Directive (5MLD) and aligns with the latest FATF recommendations. All virtual currency service providers must register with the Office of the Republic of Slovenia.
2. Cryptocurrency regulation in Slovenia: what’s new?
Several notable developments have taken place this year in the cryptocurrency sector in Slovenia:
July 25, 2024:Slovenia has issued a €30 million on-chain digital sovereign bond, the first of its kind in the EU, with a yield of 3.65%, maturing on 25 November 2024.
May 14, 2024:NiceHash has announced the first Slovenian Bitcoin-focused conference, NiceHashX, scheduled for November 8-9 in Maribor.
3. Explanation of the tax framework for cryptocurrencies in Slovenia
The Slovenian cryptocurrency tax framework provides clear guidelines for individuals and businesses. According to the Slovenian Financial Administration, the tax treatment depends on the status of the trader and the nature of the transaction.
- People:Income earned from cryptocurrencies through employment or ongoing business activities is subject to personal income tax. However, capital gains from transactions or market fluctuations are exempt from tax.
- Companies:Capital gains from cryptocurrency-related activities are subject to a 19% corporate tax. Value-added tax (VAT) generally applies at a rate of 22%, although cryptocurrency transactions that are considered as means of payment are exempt from VAT. Companies are not allowed to limit payment methods to cryptocurrencies alone. Tokens issued during ICOs must follow standard accounting rules and corporate tax law.
4. Cryptocurrency Mining in Slovenia: What You Need to Know
Cryptocurrency mining is not restricted in Slovenia, but income from mining is considered business income and is therefore taxable. This includes rewards from validating transactions and any additional income from mining operations. Both individuals and legal entities must comply with Slovenian tax regulations.
5. Timeline of the development of cryptocurrency regulation in Slovenia
Here is a timeline highlighting the evolution of cryptocurrency regulations in Slovenia:
- 2013:The Slovenian Financial Administration has issued guidelines stating that income from cryptocurrency transactions should be taxed.
- 2017:The Slovenian Financial Administration has provided more detailed guidelines on cryptocurrency taxation, depending on factors such as the status of the trader and the type of transaction.
- 2023:The EU adopted the Markets in Crypto-Assets (MiCA) Regulation, establishing a uniform regulatory framework for crypto-assets, their issuers and service providers across the EU.
Endnote
Slovenia’s approach to the cryptocurrency sector is commendable, reflecting its optimistic view of the future of cryptocurrencies. The country’s balanced regulatory framework supports cryptocurrency innovation while protecting users’ rights and preventing illegal activities. Recent developments demonstrate Slovenia’s commitment to continually improving its regulatory environment. Slovenia’s cryptocurrency regulatory framework sets a positive example for other nations navigating the evolving cryptocurrency landscape.
Read also : Hong Kong Cryptocurrency Regulations 2024
photo by Shubham Dhage on Unsplash
As the cryptocurrency landscape continues to evolve, the need for clear regulation has never been more pressing.
With Vice President Kamala Harris now leading the charge on digital asset regulation in the United States, this represents a unique opportunity to start fresh. This fresh start can foster innovation and protect consumers. It can also pave the way for widespread adoption across industries, including real estate agencies, healthcare providers, and online gaming platforms like these. online casinos ukAccording to experts at SafestCasinoSites, these platforms come with benefits such as bonus offers, a wide selection of games, and various payment methods. Ultimately, all this increase in adoption could propel the cryptocurrency market forward.
With this in mind, let’s look at the current state of cryptocurrency regulation in the United States, a complex and confusing landscape. Multiple agencies, including the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Financial Crimes Enforcement Network (FinCEN), have overlapping jurisdictions, creating a fragmented regulatory environment. This lack of clarity has stifled innovation as companies are reluctant to invest in the United States, fearing regulatory repercussions. A coherent and clear regulatory framework is urgently needed to realize the full potential of cryptocurrencies in the United States.
While the US struggles to find its footing, other countries, such as Singapore and the UK, are actively looking into the cryptocurrency sector by adopting clear and supportive regulatory frameworks. This has led to a brain drain, with companies choosing to locate in more conducive environments.
Vice President Kamala Harris has a unique opportunity to change that narrative and start over. Regulation of cryptocurrencies. By taking a comprehensive and inclusive approach, it can help create a framework that balances consumer protection with innovation and growth. The time has come for clear and effective regulation of cryptocurrencies in the United States.
Effective regulation of digital assets is essential to foster a safe and innovative environment. The key principles guiding this regulation are clarity, innovation, global cooperation, consumer protection, and flexibility. Clear definitions and guidelines eliminate ambiguity while encouraging experimentation and development to ensure progress. Collaboration with international partners establishes consistent standards, preventing regulatory arbitrage. Strong safeguards protect consumers from fraud and market abuse, and adaptability allows for evolution in response to emerging trends and technologies, striking a balance between innovation and protection.
The benefits of effective cryptocurrency regulation are multiple and far-reaching. By establishing clear guidelines, governments can attract investors and mainstream users, driving growth and adoption. This can, in turn, position countries like the United States as global leaders in fintech and innovation. Strong safeguards will also increase consumer confidence in digital assets and related products, increasing economic activity.
A thriving crypto industry can contribute significantly to GDP and job creation, which has a positive impact on the overall economy. Furthermore, effective regulation has paved the way for the growth of many businesses such as tech startups, online casinos, and pharmaceutical companies, demonstrating that clear guidelines can open up new opportunities without stifling innovation. This is a great example of how regulation can allay fears of regressive policies, even if Kamala Harris does not repeal the current progressive approach. By adopting effective regulation, governments can create fertile ground for the crypto industry to thrive, thereby promoting progress and prosperity.
Big news! The latest regulatory changes in South Korea are expected to impact major cryptocurrency exchanges like Upbit and Bithumb. Under the updated regulations, these platforms will now have to pay monitoring fees, which could cause problems for some exchanges.
Overview of new fees
In the latest move to regulate cryptocurrencies, the Financial Services Commission announced on July 1 the revised “Enforcement Order of the Act on the Establishment of the Financial Services Commission, etc.” update “Regulations on the collection of contributions from financial institutions, etc.” According to local legislation newsThe regulations require virtual asset operators to pay supervisory fees for inspections conducted by the Financial Supervisory Service starting next year. The total fees for the four major exchanges are estimated at around 300 million won, or about $220,000.
Apportionment of costs
Upbit, which holds a dominant market share, is expected to bear more than 90% of the total fee, or about 272 million won ($199,592) based on its operating revenue. Bithumb will pay about 21.14 million won ($155,157), while Coinone and GOPAX will contribute about 6.03 million won ($4,422) and 830,000 won ($608), respectively. Korbit is excluded from this fee due to its lower operating revenue.
Impact on the industry
The supervision fee will function similarly to a quasi-tax for financial institutions subject to inspections by the Financial Supervisory Service. The new law requires any company with a turnover of 3 billion won or more to pay the fee.
In the past, fees for electronic financial companies and P2P investment firms were phased in over three years. However, the taxation of virtual asset operators has been accelerated, reflecting the rapid growth of the cryptocurrency market and increasing regulatory scrutiny.
Industry reactions
The rapid introduction of the fee was unexpected by some industry players, who had expected a delay. Financial Supervisory Service officials justified the decision by citing the creation of the body concerned and the costs already incurred.
While larger exchanges like Upbit and Bithumb can afford the cost, smaller exchanges like Coinone and GOPAX, which are currently operating at a loss, could face an additional financial burden. This is part of a broader trend of declining trading volumes for South Korean exchanges, which have seen a 30% drop since the new law went into effect.
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