As the year draws to a close, the European Union’s (EU) Markets in Crypto Assets (MiCA) regulation is set to take effect. However, with just three weeks remaining until the deadline, concerns are mounting that almost a quarter of the 27 countries within the bloc may not be ready for implementation.
The Countdown Begins
For MiCA to apply in individual countries, EU members must align their local laws with the regulation. Unfortunately, Belgium, Italy, Poland, Portugal, Luxembourg, and Romania have yet to take the necessary steps. This is according to a document created by the Electronic Money Association (EMA), a trade body that shared its findings with CoinDesk.
A Two-Stage Process
The implementation of MiCA has been divided into two phases. The first phase took place in June, when stablecoin issuers were required to ensure they had the necessary authorization to operate within their respective countries.
However, the second phase – which concerns crypto asset service providers (CASPs) such as exchanges, wallet providers, and custodians – is where the majority of the problems lie. CASPs must register and be based in at least one EU country to apply for a license under MiCA that enables them to operate across the trading bloc.
Regulatory Technical Standards: A Bottleneck
Several crypto industry trade associations have highlighted a major issue with national regulators, known as national competent authorities (NCAs), regarding the short timespan between the deadline and October, when certain regulatory technical standards were finalized. This left just two months for dealing with resulting paperwork and complexity.
A "No-Action" Period Request
In response to these challenges, trade groups such as Blockchain for Europe, the European Crypto Initiative, the Electronic Money Association, and the International Association for Trusted Blockchain Applications (IATBA) sent a letter to ESMA last month requesting a ‘no-action’ period of six months. This would essentially be a hold on enforcement activity, allowing firms yet to receive authorization to continue operating without fear of sanctions.
ESMA’s Response
Unfortunately, ESMA has denied the request for an extended no-action period. However, the MiCA deadline will be discussed at a meeting scheduled for December 11. While the stay of enforcement is unpalatable, it is possible that ESMA may provide ‘guidance’ on timing in the coming weeks.
The Consequences
For firms yet to register under MiCA, the consequences could be severe. According to Robert Kopitsch, co-founder of Blockchain for Europe:
"If you don’t have a license by a certain date, you need to basically stop your services in Europe… Very bad for business and users will be upset. And it doesn’t make the EU look good."
Countries Struggling to Meet the Deadline
Several countries are reportedly struggling to meet the deadline, including:
- Ireland
- Portugal
- Belgium
Each country has expressed its own challenges in implementing MiCA:
- The Portuguese Securities Market Commission said: "The legislative proposal that implements the responsibilities arising from the European MiCA Regulation, as well as the allocation of powers between the CMVM and the Portuguese Central Bank (Banco de Portugal), falls under the jurisdiction of the Portuguese Government and is currently under consideration by the Government."
- A spokesperson for Belgium’s FSMA said: "As a (political) decision on the designation of the competent authorities for MiCA is pending, the FSMA cannot give any input for your questions."
A Call to Action
The implementation of MiCA poses significant challenges for both individual countries and the crypto industry as a whole. As we approach the deadline, it remains to be seen how these challenges will be addressed.
In conclusion, while there are concerns that some EU member states may not be ready for the implementation of MiCA, efforts are underway to address the challenges associated with this regulation.
