Since the adoption of cryptocurrencies as a payment alternative, many countries have created and promoted different regulations to regulate companies or entities that provide products or services related to cryptocurrencies.
This has given rise to the emergence of different organizations and entities, which, through their regulations and standards, allowed financial service providers, companies, and businesses to develop a crypto-asset market with greater stability and integrity. One of the organizations that supported and generated standards for the crypto-asset market was the European Union, which, through the Markets in Crypto-Assets Regulation (MiCA), implements a comprehensive regulatory framework for cryptocurrencies and crypto-assets in general. Below, we will learn more about this regulation:
Markets in Crypto-Assets Regulation (MiCA)
The Markets in Crypto-Assets Regulation (MiCA) is a comprehensive regulatory framework that allows for the regulation of crypto-assets and their service providers. MiCA was established by the European Union with the aim of balancing the benefits of using cryptocurrencies and crypto-assets while protecting consumers, ensuring market integrity, and maintaining financial stability within the European Union. Mica protects consumers and maintains the integrity of the European market by:
Authorization and supervision
Through the authorization and supervision required by MiCA, crypto-asset service providers, issuers of asset-referenced tokens and e-money tokens are required to obtain authorization and be subject to supervision by the competent national authorities before being able to operate, ensuring certain standards of security, legality, and quality in the sector.
Types of crypto-assets
Through this regulation, MiCA identifies and regulates several types of crypto-assets, each with distinct characteristics and requirements. In this way, MiCA seeks to maintain a stable value by backing each e-money token in relation to a single official currency.
Asset-referenced tokens in relation to other assets or a basket of assets seek to ensure that issuers of these types of tokens ensure transparency and maintain reserves to match the value of the tokens issued. In relation to other crypto-assets (such as cryptocurrencies Bitcoin or Ethereum), MiCA seeks to ensure market integrity and consumer protection.
Protecting the consumer
Through this regulation, MiCA includes several measures to protect consumers in the cryptocurrency market, thus seeking to protect cryptocurrency holders and customers of service providers, which guarantees the rights of withdrawal and liability for incorrect information, thus creating a safer and more transparent environment for consumers who make transactions with cryptocurrencies or crypto-assets, thus promoting confidence in the market.
Transparency and disclosure requirements
MiCA requires specific transparency and disclosure requirements for the issuance, offering to the public, and admission of crypto-assets to trading platforms and service providers, as this way it can ensure that consumers and investors have clear and accurate information about crypto-assets.
Uniform rules
Through this regulation, MiCA applies uniform rules for all service providers and crypto-asset issuers that were previously not regulated by existing EU financial services legislation. This allows for a consistent regulatory framework and clearer rules, as well as promoting a transparent and competitive environment for all crypto-asset service providers and issuers in the European Union.
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