Regulation (EU) 2023/1114 on Markets in Crypto-assets (MiCA) and Regulation (EU) 2023/1113 on information accompanying transfers of funds and certain crypto-assets (WTR2) were both published in the Official Journal of the European Union on 9 June 2023. With this, the texts of these regulations have now been finalised and it has become known when MiCA and WTR2 will start to apply to the relevant market parties. MiCA also sets transition periods within which existing (registered) crypto-asset service providers (a CASP) must have obtained a MiCA-license at the latest in order to continue offering crypto-asset services in the future.

MiCA

MiCA will introduce a new harmonised financial regulatory framework for crypto-assets within Europe. MiCA focuses on the one hand on issuers engaged in the offer, issuance and listing of different types of crypto-assets (tokens). MiCA will also further define and distinguish different types of crypto-assets. These include utility tokens, asset-referenced tokens (ARTs), e-money tokens (EMTs) and other crypto assets. On the other hand, MiCA will focus on parties offering services related to crypto-assets (the crypto-asset service providers).

In this news release, we specifically highlight various relevant dates under MiCA, which will come into effect on 29 June 2023 (20 days after publication in the Official Journal).

• MiCA will be fully applicable as of 30 December 2024. This means that CASPs wishing to operate on the Dutch (and European) crypto market must have a MiCA license from that point onwards.

• However, some parts from MiCA will become applicable as early as 30 June 2024. Briefly stated, these parts relate to a licensing requirement for issuers to offer ART and EMT tokens to the public and request their admission to trading and related rules. These sections do not concern the provision of crypto-asset services by CASPs.

• MiCA also includes provisions on drafting or adopting delegated acts, technical standards or guidelines that will become applicable earlier. The European Banking Authority (EBA) and European Securities and Markets Authority (ESMA) are required to submit many of these technical standards and guidelines to the European Commission by 30 June 2024, which will then be published and become effective by 30 December 2024.

An important element for current CASPs in the Netherlands using the registration regime supervised for integrity by the Dutch Central Bank (De Nederlandsche Bank N.V., DNB) concern the transitional provisions MiCA contains for these market participants. It provides that CASPs offering their services in accordance with national law before 30 December 30 2024, may continue to do so until 1 July 2026 or until a MiCA license is granted or denied, whichever comes first. Member states may choose not to apply this transitional measure or limit its duration. We do currently not know whether the Netherlands will use this option. In addition, it is not clear at this time how this transitional regime will exactly work out in practice, for example in the situation that a Dutch party, in addition to crypto-asset services subject to registration, also offers and/or provides services that are currently not yet regulated but will be regulated under MiCA (for example the provision of advice on crypto-assets). As far as we are concerned, it is important that DNB provides more clarity on the transitional regime and its exact effect for Dutch CASPs as soon as possible.

MiCA further provides that member states may apply a simplified procedure to an application for authorisation submitted between 30 December 2024 and 1 July 2026 by entities already offering crypto-asset services in accordance with national law on 30 December 2024. Again, it remains to be seen how DNB will deal with this in practice. In any event, DNB must notify the European Commission and ESMA by 30 June 2024 at the latest. Also in this regard, it is up to DNB to provide timely further guidance to the Dutch crypto market.

WTR2

The WTR2, also known as the Transfer of Funds Regulation, expands the already existing regulation on information to accompany transfers of funds by adding “crypto-assets” and “crypto-asset service providers” to its scope. As a result of the expansion, it becomes mandatory for institutions designated in the regulation to share information about the sender and beneficiary of a crypto-asset transaction. This is already the case for regular fund transfers. Based on this information, the aim is to effectively monitor crypto-asset transactions to prevent money laundering and terrorist financing, and screen senders and beneficiaries against relevant sanction lists. The information to be exchanged concerns the names of the sender and beneficiary, the (crypto) account number, and information to verify that it is actually the sender such as an address, personal document number, customer identification number or date and place of birth. The WTR2 will enter into force simultaneously with MiCA on 29 June 2023 and will be fully applicable within Europe as of 30 December 2024.

Finnius will continue to actively monitor further developments in the coming period, especially around the design and adoption of delegated acts, technical standards or guidelines under MiCA and will publish other news items on this in the future.