9 key steps for ensuring compliance with incoming MiCA regulations
In May 2023, the European Union signed its landmark Markets in Crypto-Assets legislation into law. Crypto businesses operating in the EU now have a fixed timeline to comply with MiCA’s wide-ranging guidance and regulations, which address everything from defining a crypto asset to establishing reserve requirements for stablecoins.
While MiCA is impacting crypto at a challenging time, many insiders welcome this groundbreaking legislation and expect it to lead to a stronger, more vibrant industry. Below, nine members of Cointelegraph Innovation Circle share their insights to help crypto companies ensure they’re compliant with MiCA once it’s in full effect.
Embrace the transition
Change is always difficult, but progress is something to be celebrated. After prolonged periods of uncertainty in the EU regulatory space, MiCA is offering clarity and legal definitions that participants have long been seeking. These common-sense guardrails aim to cultivate equilibrium among all actors in the space. In turn, leaders should work closely with regulators to embrace this transition. – Oleksandr Lutskevych, CEX.IO
Proactively address compliance
Establish a robust compliance program. This involves staying updated on regulatory changes, implementing clear internal policies and procedures, ensuring staff training on MiCA requirements, and adopting transparent communication with regulators. Proactively addressing compliance will minimize potential risks and help you maintain a strong reputation in the market. – Tomer Warschauer Nuni, Kryptomon
Engage with relevant regulators
Figure out now if your business is getting caught by MiCA (get legal advice). If it is, engage with relevant regulators in the EU. They are working just as hard to figure out how to implement MiCA as you are trying to comply with it. You must develop a plan for implementation and compliance, and seek some acceptance of that approach. Finally, approach the process as collaboration, not confrontation. – Allan Pedersen, Monetalis
Review existing white papers (or create one now)
White papers are common in the blockchain space, but now they are almost a requirement for projects to be compliant with MiCA. Project leaders should dedicate time to reviewing their existing white papers, making sure they are accurate and taking into account any changes since their original publication. For companies that don’t have a white paper already, putting one together should certainly be a priority. – Anthony Georgiades, Pastel Network
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Seek legal advice in creating an action plan
As the first comprehensive crypto regulation, companies must comply with MiCA before it comes into effect (as early as mid-2024). It’s essential to seek legal advice and enact a watertight, step-by-step action plan to achieve this, which will differ for each company. The “Wild West” days of crypto are ending, meaning there will be increased credibility, investment and growth in the long run. – Sheraz Ahmed, STORM Partners
Prioritize transparency
By making transparency a priority, companies can not only fulfill their responsibilities under MiCA, but also establish credibility with investors and regulators. This, in turn, can foster a more stable and foreseeable regulatory landscape for crypto assets in the European Union. – Ilias Salvatore, Flooz XYZ
Explore sustainable mining practices
To comply with MiCA, companies should prioritize stability, transparency, risk management and asset protection. They must address their environmental impact and explore sustainable mining practices. Understanding related regulations, including the Digital Operational Resilience Act, the DLT Pilot Regime and the Transfer of Funds Regulation, is crucial for comprehensive compliance in the evolving regulatory landscape. – Vinita Rathi, Systango
Consider your operations in non-EU jurisdictions
Determine how complying with MiCA could affect your operations in other jurisdictions and whether it will create contradictions. For example, proof-of-work is frowned upon in the EU because of environmental, social and governance concerns. But in the United States, SEC Chairman Gary Gensler says adopting proof-of-stake can make crypto a security. You will need to grapple with these contradictions. – Zain Jaffer, Zain Ventures
Ensure KYC practices are airtight
Don’t wait to make sure your Know Your Customer practices are airtight. KYC processes will be an important part of MiCA, so blockchain companies should aim to already be fully compliant before the regulation takes effect. While KYC might be a hurdle for some users, these practices can help kick-start Web3 mainstream adoption by reducing harmful criminal activities like money laundering. – Wolfgang Rückerl, ENT Technologies AG
This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.
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