IDEAS home Printed from https://ideas.repec.org/p/zbw/wifinw/132022.html
   My bibliography  Save this paper

The Path to the EU Regulation Markets in Crypto-assets (MiCA)

Author

Listed:
  • Read, Oliver
  • Diefenbach, Carolin

Abstract

This paper provides background to the upcoming EU regulation on Markets in Crypto-Assets (MiCA). The first step to regulate crypto-assets at EU level was taken by including virtual currencies in the revision of the Anti-Money Laundering Directive (5AMLD) which came into force 2018. Initial coin offerings fueled growth to a market with a variety of crypto-assets (payment, investment/security, utility and hybrid tokens). In principle, MiFID II should cover investment/security tokens by treating these as financial instruments. In January 2019, EBA and ESMA identified regulatory gaps at EU level. The announcement on the stablecoin project Libra in June 2019 sent shockwaves and led to defensive reaction against global stablecoins by regulators in light of significant risks and challenges posed. The EU institutions adopted strict positions against global stablecoins taken by the G7 and the G20. In September 2020, the European Commission launched the MiCA draft legislation to plug regulatory gaps concerning payment (including stablecoins) and utility tokens. Issuers, offerors and service providers of crypto-assets that are not financial instruments would be regulated under MiCA at EU level. Stricter rules should apply for stablecoins. After negotiations between the EU institutions, the final agreed MiCA text will go to plenary vote soon. The EU regulation will come into force in the EU member states in 2024. Many additional areas of action (Decentralized Finance, non-fungible tokens, EU taxonomy for sustainable activities) had to be left out from the MiCA scope for the sake of finalising the legislation.

Suggested Citation

  • Read, Oliver & Diefenbach, Carolin, 2022. "The Path to the EU Regulation Markets in Crypto-assets (MiCA)," wifin Working Paper Series 13/2022, RheinMain University of Applied Sciences, Wiesbaden Institute of Finance and Insurance (wifin).
    • Handle: RePEc:zbw:wifinw:132022
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/266233/1/wifin-wp13.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bullmann, Dirk & Klemm, Jonas & Pinna, Andrea, 2019. "In search for stability in crypto-assets: are stablecoins the solution?," Occasional Paper Series 230, European Central Bank.
    2. Stefan Schäfer & Oliver Read, 2020. "Global Stablecoins: Aspects of Financial and Monetary Stability," Credit and Capital Markets, Credit and Capital Markets, vol. 53(2), pages 159-185.
    3. Oliver Read & Stefan Schäfer, 2020. "Libra Project: Regulators Act on Global Stablecoins," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 55(6), pages 392-398, November.
    4. Force, ECB Crypto Assets Task, 2020. "Stablecoins: Implications for monetary policy, financial stability, market infrastructure and payments, and banking supervision in the euro area," Occasional Paper Series 247, European Central Bank.
    5. Gschossmann, Isabella & van der Kraaij, Anton & Benoit, Pierre-Loïc & Rocher., Emmanuel, 2022. "Mining the environment – is climate risk priced into crypto-assets?," Macroprudential Bulletin, European Central Bank, vol. 18.
    6. Chimienti, Maria Teresa & Kochanska, Urszula & Pinna, Andrea, 2019. "Understanding the crypto-asset phenomenon, its risks and measurement issues," Economic Bulletin Articles, European Central Bank, vol. 5.
    7. Adachi, Mitsutoshi & Cominetta, Matteo & Kaufmann, Christoph & van der Kraaij, Anton, 2020. "A regulatory and financial stability perspective on global stablecoins," Macroprudential Bulletin, European Central Bank, vol. 10.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Oliver Read & Stefan Schäfer, 2020. "Libra Project: Regulators Act on Global Stablecoins," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 55(6), pages 392-398, November.
    2. David Lowe & Matthew Malloy, 2021. "Global Stablecoins: Monetary Policy Implementation Considerations from the U.S. Perspective," Finance and Economics Discussion Series 2021-020, Board of Governors of the Federal Reserve System (U.S.).
    3. Friedrich Thießen, 2021. "Digitaler Euro: Funktionsweise und kritische Würdigung [The Digital Euro: Functionality and Critical Appraisal]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 101(7), pages 529-535, July.
    4. Sood, Kirti & Singh, Simarjeet & Behl, Abhishek & Sindhwani, Rahul & Kaur, Sandeepa & Pereira, Vijay, 2023. "Identification and prioritization of the risks in the mass adoption of artificial intelligence-driven stable coins: The quest for optimal resource utilization," Resources Policy, Elsevier, vol. 81(C).
    5. Alexandra Mitschke, 2021. "Central Bank Digital Currencies and Monetary Policy Effectiveness in the Euro Area," Working Papers Dissertations 74, Paderborn University, Faculty of Business Administration and Economics.
    6. Kliber, Agata, 2022. "Looking for a safe haven against American stocks during COVID-19 pandemic," The North American Journal of Economics and Finance, Elsevier, vol. 63(C).
    7. Ariah Klages-Mundt & Dominik Harz & Lewis Gudgeon & Jun-You Liu & Andreea Minca, 2020. "Stablecoins 2.0: Economic Foundations and Risk-based Models," Papers 2006.12388, arXiv.org, revised Oct 2020.
    8. Douglas Arner & Raphael Auer & Jon Frost, 2020. "Stablecoins: potential, risks and regulation," BIS Working Papers 905, Bank for International Settlements.
    9. Pietro Cova & Alessandro Notarpietro & Patrizio Pagano & Massimiliano Pisani, 2022. "Monetary policy in the open economy with digital currencies," Temi di discussione (Economic working papers) 1366, Bank of Italy, Economic Research and International Relations Area.
    10. Abate, Giorgio & Branzoli, Nicola & Gallo, Raffaele, 2023. "Crypto-Asset Markets: Structure, Market Developments in 2022 and Policy Considerations," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 76(3), pages 353-386.
    11. Force, ECB Crypto Assets Task, 2020. "Stablecoins: Implications for monetary policy, financial stability, market infrastructure and payments, and banking supervision in the euro area," Occasional Paper Series 247, European Central Bank.
    12. Alexander Lipton & Aetienne Sardon & Fabian Schar & Christian Schupbach, 2020. "From Tether to Libra: Stablecoins, Digital Currency and the Future of Money," Papers 2005.12949, arXiv.org.
    13. Douglas Arner & Raphael Auer & Jon Frost, 2020. "Stablecoins: risks, potential and regulation," Financial Stability Review, Banco de España, issue Autumn.
    14. Angerer, Martin & Hoffmann, Christian Hugo & Neitzert, Florian & Kraus, Sascha, 2021. "Objective and subjective risks of investing into cryptocurrencies," Finance Research Letters, Elsevier, vol. 40(C).
    15. Raphael Auer & Codruta Boar & Giulio Cornelli & Jon Frost & Henry Holden & Andreas Wehrli, 2021. "CBDCs beyond borders: results from a survey of central banks," BIS Papers, Bank for International Settlements, number 116.
    16. Douglas Arner & Raphael Auer & Jon Frost, 2020. "Stablecoins: risks, potential and regulation," Revista de Estabilidad Financiera, Banco de España, issue NOV.
    17. Djogbenou, Antoine & Inan, Emre & Jasiak, Joann, 2023. "Time-varying coefficient DAR model and stability measures for stablecoin prices: An application to Tether," Journal of International Money and Finance, Elsevier, vol. 139(C).
    18. Dimitris Malliaropulos & Petros Migiakis, 2020. "Sovereign credit ratings and the fundamentals of the Greek economy," Economic Bulletin, Bank of Greece, issue 51, pages 1-30, July.
    19. Schneider, Julian & Oehler, Andreas, 2021. "Competition for visibility: When do (FX) signal providers employ lotteries?," International Review of Financial Analysis, Elsevier, vol. 78(C).
    20. Alessandro Croce & Marco Langiulli & Giuseppina Marocchi, 2020. "The weight of a Libra: are stablecoins a new challenge for external statistics compilers?," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Bridging measurement challenges and analytical needs of external statistics: evolution or revolution?, volume 52, Bank for International Settlements.

    More about this item

    Keywords

    Bitcoin; crypto-assets; crypto-asset service providers; cryptocurrencies; distributed ledger technology (DLT); Diem; electronic money; initial coin offering (ICO); Libra; Meta; Markets in Cryptoassets (MiCA); non-fungible token (NFT); payment tokens; security tokens; stablecoins; TerraUSD; Transfer of Funds Regulation (ToFR); utility tokens;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:wifinw:132022. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/fwfwdde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.