• 24 June, 2024

Circle Internet Financial’s Sr. Dir. Explains EU MiCA Regulations

Circle Internet Financial has reportedly just earned in-principle regulatory approval to operate in Singapore. But Circle’s Jonas Frederiksen, Senior Director (EU Government Affairs), throws light on the European Unions’ markets in crypto-assets (MiCA) crypto regulations in a series of tweets.

Stablecoins, digital euro, payments, and crypto in the EU; too much to digest? Comprehending Frederiksen’s address to the EU regulations in 2023 is the key. Sharing their MiCA regulations’ analysis, Jonas Frederiksen tweeted:

The EU’s MiCA crypto law is set to be introduced in March 2023. Expectation is set for it to seek a confirmation from the European Parliament (EP) / Council for the Summer 2022’s political agreement. Frederiksen states the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) are readying the practical rulebooks for MiCA in the next 12 to 18 months.

MiCA regulation’s key provisions’ translation shall guide private sector operators. The Digital Euro is readied by the European Central Bank (ECB) all through the year with enough institutional additions and political statements. The European Commission is preparing for the legislative proposal in Q2, whereas the legislative negotiations start in summer 2023.

The EC comes out with the long-awaited review of the Payment Service Directive 2. This also includes legislative proposals to alter the Electronic Money Institutions, Payment Institutions, Payment Service Providers, and EU credit institutions’ rulebook.

The anti-money laundering (AML) negotiations are progressing in the EP. Frederiksen asks if the EU can balance norms, values, and the burden of ineffective AML / CFT (Countering the Financing of Terrorism) / KYC mandates on the private sector.

The EC’s 2022 DAC8 proposal for tax information sharing gets finalized by the Council during the Swedish EU Presidency. This also includes the new reporting requirements for CASPs (Crypto Asset Service Providers). Swedish Presidency, EC, and EP complete negotiations on Instant Payments’ rules by the EC.

Addressing Open Finance, Frederiksen asks, is the Commission proceeding with substantive measures in the context of the PSD2 review and new legislation? Changes are expected in the access and utilization of consumer data via the Digital Finance Strategy, the Retail Payments Strategy, and the 2022 consultation.

As for the Digital ID set to start during the Swedish Presidency, the EU is ready for trilogues. The EP’s nego-position shall finalize in Q1 2023, but blockages would remain for this EU app having citizens’ ID wallets. In the Data Act, Article 30, dealing with smart contracts’ standards, is poised for deployment under the EU rules.

The blockchain-based Interoperable Europe Act aims to expedite Europe’s public sector’s digital transformation. European Blockchain Services Infrastructure (EBSI) builds Verifiable Credentials, Track and Trace, Accountability, and Intellectual Property. Asylum Process Management and IP counterfeiting is also included.

The European Commission’s ‘Metaverse’ initiative is anticipated to be prepared by mid-2023. The EU-US technology (and trade) relations are influencing Brussels. The EU-US Data Privacy Framework and the EU-US Tech and Trade Council (scheduled for late spring) would grasp the EU regulators and lobbyists’ attention.

The AI Act, the Chips Act, Health Data Space, cybersecurity, DSA / DMA, Digital Resilience, etc. keep on gaining attention. The Commission, EP, and Council are working towards finalizing laws prior to 2024 elections and new European Commission’ appointment.

To end their comprehensive twitter thread, Frederiksen states an interesting analogy. He states the regulatory levels on DeFi, NFTs, and ESG for blockchains would remain untouched in 2023. But he clarifies that these would reemerge in 2025 with the new Commissioner bracing for the way forward on 2024’s first MiCA progress report.

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