Clifford Chance

The EU's Markets in Crypto-assets Regulation (MiCAR) introduces an EU regulatory framework for the issuance of, intermediating and dealing in crypto-assets. Parts of MiCAR impacting the issuance, offering and admission to trading of stablecoins entered into force at the end of June 2024, while equivalent provisions for other crypto-assets, new licensing and conduct of business requirements for cryptoasset service providers, and a market abuse regime with respect to crypto-assets will apply from the end of the year.

We look at what issuers of stablecoins and other crypto-assets, custodians and other crypto-asset service providers need to know now.

Overview

MiCAR creates a broad regulatory framework for crypto-assets in the EU which:

• regulates the issuance of, and admission to trading of, crypto-assets, including transparency and disclosure requirements;
• introduces licensing of crypto-asset service providers and issuers of asset-referenced tokens and electronic money tokens;
• clarifies the regulatory obligations applicable to issuers of asset-referenced tokens and electronic money tokens, and crypto-asset service providers, including consumer protection rules for the issuance, trading, exchange and custody of crypto-assets;
• strengthens confidence in crypto-asset markets by creating a market abuse regime prohibiting market manipulation and insider dealing; and
• clarifies the powers, including the co-operation and sanctions framework, available to competent authorities.

The requirements under MiCAR are broadly similar to requirements under the existing EU financial services regimes, including requirements relating to disclosures, governance and licensing. However, as there are nuances between MiCAR and the existing regime, firms engaging in crypto-asset activities will need to consider whether they will fall under the MiCAR definition of "crypto-assets" or whether they are subject to another regulation, to ensure that they adhere to the appropriate regulation, in particular for transferable securities which may constitute a financial instrument falling under the Markets in Financial Instruments Directive II (MiFID II).

MiCAR is part of the European Commission's wider digital finance strategy, which also includes a Regulation on digital operational resilience (DORA) – which will also apply to crypto-asset service providers when it takes effect in January 2025 – and the Regulation on a distributed ledger technology (DLT) pilot regime focused on financial market infrastructures based on DLT which opened to applications in March 2023.

MiCAR broadly applies to the following categories of crypto-assets:

Asset-referenced tokens (ARTs) are defined as a type of crypto-asset that is not an e-money token and that purports to maintain a stable value by referring to another value or right or a combination thereof, including one or more official currencies.

E-money tokens (EMTs) are defined as a type of crypto-asset that purports to maintain a stable value by referencing the value of one official currency. E-money tokens which maintain the value of a fiat currency of the Union shall be deemed to be e-money as defined in the E-money Directive.

Other crypto-assets – all cryptoassets which are not ARTs or EMTs, which may include tokens that are described as "stablecoins" but which are controlled by algorithms or other types of stablisation mechanic.

Different rules apply for each category of crypto-asset.

Need to know more?

Read our full briefing where we answer the following questions:

• Who does MiCAR apply to?
• What types of crypto-assets are in scope of MiCAR?
• What is not covered by MiCAR?
• My firm could be an issuer of crypto-assets. What does MiCAR mean for me?
• What requirements apply to stablecoin issuers?
• My firm provides crypto-asset services. Does it need to be licensed?
• What requirements apply to cryptoasset service providers (CASPs)?
• My firm provides crypto custody services – is it liable for losses?
• How does supervision work under MiCAR?
• Do market abuse restrictions apply?
• When and how does MiCAR apply?
• What should my firm be doing now to comply with MiCAR?

Also, read our separate briefing What does MiCAR mean for issuing and offering stablecoins and other crypto-assets in the EU? 

This focuses on the impact of MiCAR on firms who engage in a primary market transaction in relation to cryptoassets including stablecoins, i.e. offering crypto-assets to the public and/or seeking to admit them to trading on a crypto-asset trading venue. This includes the introduction of requirements around legal status, conduct and governance for such firms, as well as new obligations to publish and notify a white paper.