MiCA (Markets in Crypto-Assets Regulation)

The Markets in Crypto-Assets Regulation (MiCA) is the European Union’s primary legislative framework governing crypto-assets. Published in the Official Journal of the EU in June 2023 following formal enactment in May 2023, MiCA represents the most comprehensive jurisdiction-specific crypto regulatory framework enacted by any major economy. It applies directly across all 27 EU member states without requiring transposition into national law, creating a single regulatory regime for a market of over 450 million consumers.

Legislative Background

MiCA was proposed by the European Commission in September 2020 as part of the Digital Finance Package, alongside the DLT Pilot Regime and proposals on digital operational resilience (DORA). The Commission’s motivation was twofold: to provide legal certainty for crypto-asset issuers and service providers operating in the EU, and to protect consumers and financial stability from risks identified with crypto markets. Trilogue negotiations between the Commission, Parliament, and Council concluded in June 2022, with the final text adopted in April 2023.

Three Asset Categories

MiCA divides crypto-assets into three regulatory categories.

Asset-Referenced Tokens (ARTs) are crypto-assets that purport to maintain a stable value by reference to other values or rights, including baskets of currencies, commodities, or crypto-assets. ARTs that are not e-money tokens fall in this category, which includes commodity-backed stablecoins and multi-currency stablecoins. Issuers of ARTs must obtain authorization from the national competent authority of their home member state, publish a detailed white paper, maintain a reserve of assets backing the token, and comply with ongoing governance and disclosure requirements.

E-Money Tokens (EMTs) are crypto-assets that purport to maintain a stable value by reference to a single official currency. EMTs function as electronic money under MiCA and must be issued by authorized credit institutions or e-money institutions under existing EU law. The reserve backing an EMT must be held in segregated, low-risk assets, and EMT holders have a claim on the issuer at par value at all times.

Other Crypto-Assets covers all crypto-assets not qualifying as ARTs or EMTs, including utility tokens and unbacked cryptocurrencies such as Bitcoin and Ether. Issuers of other crypto-assets to the public must publish a white paper meeting disclosure requirements, but the white paper does not require pre-authorization. It must be notified to the relevant national competent authority. Offers to the public below certain thresholds (€1 million over 12 months) are exempt from the white paper requirement.

CASP Authorization and Passporting

Crypto-Asset Service Providers (CASPs) — exchanges, custodians, trading platforms, and other service providers — must obtain authorization from the competent authority in one EU member state. Once authorized, a CASP can passport its services across all 27 member states without requiring separate authorizations in each. This mirrors the passporting mechanism established for investment firms under MiFID II.

CASP authorization requires meeting requirements on governance, management qualifications, organizational structure, conflicts of interest management, complaint handling, business continuity, and prudential requirements including minimum capital thresholds. The capital requirements are calibrated by the class of CASP activity and range from €50,000 to €150,000 in own funds.

CASPs must also comply with ongoing obligations including market abuse prevention, segregation of client assets, transparency of pricing, and best execution. The obligation to segregate client assets — holding customer crypto-assets separate from the firm’s own assets — is a direct response to the failures observed in crypto exchange collapses, most notably FTX in November 2022.

Stablecoin Reserve Requirements

MiCA’s most prescriptive requirements apply to significant ARTs and EMTs — those exceeding thresholds of 10 million token holders, €5 billion in market capitalization, or €1 billion in daily transaction volume in the prior quarter. Significant stablecoin issuers face enhanced requirements including interoperability with payment systems, more stringent reserve composition rules, and direct supervision by the EBA rather than national authorities.

The reserve requirements specify that assets backing ARTs must be legally and operationally segregated from the issuer’s own assets, must be invested only in highly liquid financial instruments with minimal market and credit risk, and cannot be pledged or rehypothecated. For EMTs, the reserve must be held either in bank deposits or in EU government bonds.

ESMA’s Role and Level 2 Measures

The European Securities and Markets Authority plays a central coordination role under MiCA. ESMA maintains the EU-wide register of authorized CASPs, coordinates supervisory convergence among national competent authorities, and directly supervises certain activities including the operation of trading platforms for significant crypto-assets.

Level 2 measures — delegated acts from the Commission and regulatory technical standards (RTS) from ESMA and EBA — fill in the detailed technical requirements that the Level 1 regulation delegates. Over 30 sets of technical standards were mandated under MiCA, covering matters ranging from the content of white papers to the methodology for classifying stablecoins as significant. The Level 2 process continued into 2025 and 2026, with ESMA and EBA consulting extensively with industry on technical details.

DeFi and NFT Exclusions

MiCA explicitly excludes fully decentralized crypto-asset services — services provided without any intermediary — from the CASP authorization requirement. This exclusion reflects the drafters’ recognition that regulating truly decentralized protocols requires different regulatory tools from those appropriate for centralized service providers.

Non-fungible tokens (NFTs) are also generally excluded from MiCA’s scope, on the basis that their unique characteristics differentiate them from the fungible instruments that MiCA is designed to regulate. However, NFTs issued in large series that in practice function as fungible instruments may be within scope, and ESMA has been developing guidance on the boundary.

Global Influence

MiCA has become a reference point for crypto legislation globally. Jurisdictions from the UK to Singapore to Brazil have reviewed MiCA’s framework when designing their own regulatory approaches. The passporting mechanism, the three-tier asset classification, and the reserve requirements for stablecoins have all influenced legislative proposals in other jurisdictions. Whether this represents regulatory convergence or simply a common source of inspiration remains to be seen as national frameworks mature.