MiCA Regulation

What Is the MiCA Regulation?

The Markets in Crypto-Assets Regulation (MiCA) — formally Regulation (EU) 2023/1114 — is the European Union’s first comprehensive legal framework governing crypto-assets and related service providers.

Adopted in June 2023, MiCA establishes uniform rules for:

  • The issuance, offering, and admission to trading of crypto-assets, and

  • The authorisation and supervision of crypto-asset service providers (CASPs) across all EU Member States.

MiCA represents a milestone in financial regulation, bringing crypto markets under a consistent, transparent, and investor-protective framework similar to traditional financial instruments.

Objectives of MiCA

The MiCA Regulation aims to:

  • Protect consumers and investors by ensuring fair, transparent, and stable crypto markets.

  • Support innovation while maintaining financial stability.

  • Prevent market abuse, insider trading, and misleading practices.

  • Close regulatory gaps between traditional finance and the emerging crypto sector.

  • Strengthen AML/CFT compliance in line with the EU’s broader Anti-Money Laundering Package and FATF Recommendations.

Scope of MiCA

MiCA applies to:

  • Issuers of crypto-assets who offer tokens to the public or seek admission to trading on a trading platform.

  • Crypto-asset service providers (CASPs) — including exchanges, custodians, brokers, and wallet providers — operating within the EU.

It covers crypto-assets that are not already regulated under existing EU financial laws (such as MiFID II). MiCA introduces three main categories of crypto-assets:

  1. Asset-Referenced Tokens (ARTs) – backed by a basket of assets (e.g., stablecoins linked to multiple fiat currencies or commodities).

  2. E-Money Tokens (EMTs) – crypto-assets referencing a single official currency (e.g., stablecoins pegged to EUR or USD).

  3. Other Crypto-Assets – all other digital tokens not falling into the above categories, such as utility tokens.

Key Provisions for Issuers

Issuers of crypto-assets under MiCA must:

  • Publish a crypto-asset white paper with detailed information on the project, governance, risks, and rights attached to the tokens.

  • Obtain authorisation from a competent national authority (e.g., a financial regulator in an EU Member State).

  • Meet capital and governance requirements to ensure operational soundness.

  • Maintain complaint-handling procedures and ensure fair treatment of holders.

For stablecoin issuers (ARTs and EMTs), MiCA imposes stricter requirements, including:

  • Reserves of assets to guarantee redemption rights,

  • Daily redemption of tokens at par value, and

  • Ongoing disclosure of reserves and audits.

Obligations for Crypto-Asset Service Providers (CASPs)

CASPs — such as trading platforms, custodial wallet providers, and brokers — must:

  • Obtain authorisation from their national competent authority (NCA).

  • Implement robust governance, cybersecurity, and AML/CFT systems.

  • Maintain safeguarding arrangements for clients’ assets.

  • Prevent market abuse and insider trading.

  • Provide clear and fair disclosure of fees and risks.

Once authorised in one Member State, CASPs benefit from an EU “passport”, allowing them to operate across the entire European Economic Area (EEA).

AML/CFT and Sanctions Compliance Under MiCA

MiCA is closely aligned with the EU’s AML and sanctions frameworks.
Crypto-asset service providers must comply with the same obligations as traditional financial institutions, including:

  • Customer due diligence (KYC),

  • Transaction monitoring,

  • Suspicious activity reporting (SAR), and

  • Sanctions and PEP screening.

MiCA operates in conjunction with the Transfer of Funds Regulation (TFR), which enforces the Travel Rule for crypto transactions — requiring originator and beneficiary information to accompany transfers.

Supervisory Framework

MiCA establishes a dual supervisory structure:

  • National Competent Authorities (NCAs) supervise most CASPs and issuers within their jurisdiction.

  • The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) oversee large stablecoin issuers and ensure consistency across Member States.

The European Central Bank (ECB) and the European Commission also play roles in monitoring financial stability and market integrity.

Non-compliance with MiCA can result in:

  • Administrative penalties,

  • Revocation of authorisation, and

  • Public disclosure of enforcement actions.

Benefits and Global Impact

MiCA sets a global precedent for crypto regulation by:

  • Providing legal certainty and investor protection,

  • Encouraging innovation within a secure framework, and

  • Setting international benchmarks that other jurisdictions are now referencing (e.g., UK, Singapore, UAE).

It strengthens the EU’s role as a leader in responsible digital finance and bridges the gap between traditional and decentralised finance (DeFi).

Why MiCA Matters for Compliance Professionals

For AML and compliance practitioners, MiCA represents a major shift toward regulated crypto markets. Professionals must understand how MiCA integrates with AML/CFT rules, customer onboarding, transaction monitoring, and reporting obligations.

Useful Resources