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The Cryptocurrency Market Regulation (MiCA) was signed in June 2023, finally putting the framework in place for 27 countries.Although this was a landmark law for a region that accounts for almost 20% of the global economy, MiCA the beginning A 12-18 month migration, transformation, and customization process. As the European Securities and Markets Authority points out, MiCA contains “a significant number of Level 2 and Level 3 measures” and will need further development and refinement.
Therefore, in 2024, the European Union will move to the actual enactment of MiCA, followed by cooperation and customization to extend its international influence, including EU financial institutions seeking qualified sub-custodians. You will be exposed.
Ultimately, it will be much easier for crypto exchanges and other companies to have one framework for all jurisdictions within the EU, without having to obtain separate licenses in each EU country. Masu. But even in 2024, each country will still have unique characteristics that will need to be addressed. For example, if a company is licensed to provide cryptographic services in Germany and wants to trade in France, it will still have to deal with its KYC and AML requirements in France separately.
That means it's going to be a year of governments sorting out details, creating mountains of paperwork, and filling out forms among numerous parties. When it comes to new processes related to MiCA, no one can say, “Yes, we've always done it that way.” Because there is no “before” anywhere in the world when it comes to such extensive cryptocurrency regulation. Instead, much of the learning will take place in the field and across new processes as they unfold. Businesses that are actively preparing for 2024 should experience a smoother path to reaping the unique benefits of MiCA.
Presumably, spot Bitcoin ETFs will be available in the EU sometime in 2024, first for institutional investors and then for individuals. Once a Spot Bitcoin ETF is approved for institutional use, it will be thoroughly vetted again before being made available to retail customers.
The bull market makes it more likely that the application and approval of a Spot Bitcoin ETF will happen sooner rather than later. If the trading volume is high, you may miss the opportunity to make money with financial products. This will allow a crypto-savvy generation to smoothly adopt new digital asset products.
Once the MiCA regulations are in place and operational, there may be customizations that allow more people to capture a piece of the economic pie. This includes bilateral agreements with the EU from smaller regions, allowing the EU to achieve higher trade volumes in an advantageous manner that it could not have achieved on its own. For example, a small Swiss bank does not have an EU branch for him, so if MiCA is introduced, he could theoretically sign a bilateral agreement with the EU and enjoy the benefits of MiCA. there is.
The adoption of MiCA will help Europe set the standard in contributing to international standards on anti-money laundering and countering the financing of terrorism (AML/CFT) rules and regulations. Organizations such as the International Organization of Securities Commissions (IOSCO) have developed standards that also serve as guidelines. As different countries and regions develop cryptocurrency regulations, common themes such as the “same activity, same risks, same regulation” philosophy are emerging, with regulators continually writing laws rather than , it makes sense to benefit from what other jurisdictions are doing. Reproducing the wheels.
However, it is unlikely that fully standardized international regulations will be established across the board. The economy is being driven in different ways by region, with some regions willing to introduce more open cryptocurrency regulations to attract more business, while others are more focused on risk management. The important thing is for each region to clarify its rules and processes so that cryptocurrency businesses can safely operate there and foster growth.
With the passage of MiCA, all banks and all registered asset management companies in the EU will be able to easily apply for a cryptocurrency custodian license. However, many financial institutions, such as banks, are likely not willing to take on this additional responsibility, such as having to acquire the appropriate technology and obtain and maintain the necessary technical expertise. Therefore, you will need a subserver. -An administrator who manages digital assets. It is logical to use sub-custodians to more clearly separate functions and funds.
Banks will look for established custodians who have proven their ability to properly manage volatility by keeping digital assets safe. Financial institutions can further benefit by choosing custodians that do not oversee their own exchanges to ensure accurate separation of functions.
Choosing a subcustodian strategy is just one of many decisions key stakeholders will need to make as they navigate MiCA implementation and future collaboration and customization.
