Legal research on Regulation on Markets in Crypto-Assets (MiCA)


In an era marked by rapid advancements in the cryptocurrency industry, regulatory frameworks play a pivotal role in ensuring market integrity, investor protection, and compliance. With the recent approval of the Transfer of Funds Regulation (TFR) update and the Regulation on Markets in Crypto-Assets (MiCA) by the European Parliament, the landscape of cryptocurrency regulation has undergone a significant transformation. These regulations set forth stringent requirements for cross-border money transfers involving cryptocurrencies and establish a comprehensive framework for the regulation of crypto-assets within the European Union. 

MiCA entered into force on 29 June 2023. However, its provisions will become applicable only towards the end of December 2024, except the rules on E-Money tokens and Asset-Referenced tokens which will become applicable on 30 June 2024.

It’s important to understand that MiCA targets two types of crypto-asset activities: the first is crypto-asset services (corresponding with the TFR) and the second is issuance and offerings of crypt-assets. In both cases, as we will detail herein, MiCA aims to provide clarity and certainty regarding who or what is included under the definition of Crypto-Asset Services or Crypto-Assets, however the definitions may still remain a bit vague for many players in the industry. 

While those service providers or crypto-assets that will fall under MiCA will be able to benefit from the advantages of the regulation, the players or assets that will not meet the criteria will have to turn to other areas such as any regulation adapted to financial instruments (such as listed securities) in order to be considered as regulatory operations.

It is also important to note that while most attention was set on MiCA, the revised TFR, which was amended to include crypto-assets, will most likely have significant effects on the industry as well.  

The Revised Transfer of Funds Regulation:

So, who will be considered a Crypto-Assets Service ? 

In general, MiCA defines a crypto-currency as: “a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology;” MiCA establishes a regulatory framework for crypto assets utilizing decentralized ledger technology (DLT). The key types of crypto assets covered by MiCA include:

  1. Asset-referenced tokens (ARTs): These crypto assets aim to maintain a stable value by referencing the value of various legal tender fiat currencies, commodities, other crypto assets, or a combination thereof. This category encompasses all crypto assets that do not qualify as “electronic money tokens,” which maintain a stable value by referencing a single legal tender fiat currency. 


  1. Electronic money tokens (EMTs): EMTs maintain a stable value by referencing a single legal tender fiat currency. The distinction between ARTs and EMTs lies in the underlying asset configuration supporting their value. While ARTs use non-cash assets or a currency basket, EMTs rely on a single currency, making them more akin to electronic money.


  1. Other crypto assets including utility tokens (a utility token is defined as: “a type of crypto-asset that is only intended to provide access to a good or a service supplied by its issuer;”): This category encompasses crypto assets that are neither ARTs nor EMTs. Examples include “utility tokens” designed to provide digital access to goods or services available on DLT platforms. These tokens are only accepted by the issuer and are distinct from security-type tokens, which are subject to securities laws in many jurisdictions.

Crypto assets not covered by MiCA

MiCA does not cover emerging concepts such as the DeFi (Decentralized Finance) sector and non-fungible tokens (NFTs). As per the European Central Bank’s definition, DeFi represents a novel approach to delivering financial services, eliminating the need for traditional centralized intermediaries and instead relying on automated protocols.

Non-fungible tokens, on the other hand, are distinct and indivisible tokens that represent unique digital artwork, videos, tweets, or other singular items. Unlike cryptocurrencies, which are interchangeable with others of equal value, NFTs are one-of-a-kind and backed by unique assets.

It is important to note that MiCA also does not cover central bank digital currencies (CBDCs) and other forms of financial instruments (like pension funds, deposits etc.).

Transfer of Funds Regulation (TFR) Update:

The TFR update focuses on enhancing the existing framework for cross-border money transfers, including those involving crypto assets. Key aspects of the TFR update include:

  1. Enhanced Customer Due Diligence (CDD): The updated regulation emphasizes the importance of robust CDD measures, particularly regarding the verification of customer identities and the detection of suspicious transactions related to cryptocurrencies.
  2. Stronger Anti-Money Laundering (AML) Framework: The TFR update reinforces the AML framework by imposing stricter reporting obligations on crypto asset service providers (CASPs). It requires CASPs to register with competent authorities and implement effective AML controls to prevent money laundering and terrorist financing.
  3. Supervisory and Enforcement Mechanisms: The TFR update establishes mechanisms for supervision, cooperation, and enforcement among competent authorities to ensure compliance with the regulation. It encourages information sharing and coordination to combat illicit activities related to cryptocurrencies.

So, are you effected by MiCA? 

Regulation on Markets in Crypto-Assets (MiCA):

The MiCA regulation focuses on establishing a comprehensive framework for the regulation of crypto-assets. Key aspects of MiCA include:

  1. Legal Certainty and Harmonization: MiCA aims to bring legal certainty and harmonization to the crypto-asset market within the European Union (EU). It provides a clear definition of crypto-assets and sets common requirements for issuers and service providers operating in the EU.
  2. Authorization and Supervision: MiCA introduces a streamlined authorization process for crypto-asset issuers and service providers. It establishes a single EU-wide licensing regime, enhancing market integrity and investor protection. Competent authorities will supervise authorized entities to ensure compliance.
  3. Investor Protection: MiCA strengthens investor protection by requiring issuers to provide clear and adequate information about their crypto-assets. It also establishes rules for custody, asset segregation, and conflicts of interest to safeguard investors’ interests.

To be compliant with MiCA, you should consider the following key steps:

Obtain the Required Authorization: If you are an issuer or service provider operating in the crypto-asset market, assess whether your activities fall within the scope of MiCA. If so, you will need to apply for authorization from the competent authority in your EU member state. Ensure that you meet the eligibility criteria, including capital requirements, operational conditions, and governance standards.

Implement Robust Internal Controls: Establish comprehensive internal controls and policies to ensure compliance with MiCA. This includes implementing robust anti-money laundering (AML) and know-your-customer (KYC) procedures, as well as mechanisms for safeguarding client assets and preventing conflicts of interest.

Provide Adequate Information to Investors: Comply with the transparency requirements outlined in MiCA by providing accurate, clear, and understandable information to investors about your crypto-assets. This includes details about the nature of the asset, associated risks, and any potential conflicts of interest, all should be disclosed in a whitepaper submitted to the applicable authority in the EU.

Maintain Proper Record-Keeping: Establish robust record-keeping procedures to ensure accurate and complete documentation of all relevant activities, transactions, and communications. Maintain these records for the prescribed periods as required by MiCA.

Stay Informed and Adapt: Keep abreast of any updates, guidelines, or clarifications issued by regulatory authorities regarding MiCA. Adapt your operations, policies, and procedures accordingly to ensure ongoing compliance with evolving regulatory expectations.

Being compliant with the TFR update and MiCA regulations offers several advantages:

  1. Enhanced Credibility: Compliance demonstrates a commitment to legal and regulatory standards, enhancing the credibility and reputation of service providers in the cryptocurrency market.
  2. Increased Investor Confidence: The regulations’ focus on AML measures, investor protection, and market integrity fosters investor confidence in the crypto-asset industry. Service providers will benefit from a more secure and transparent market environment.
  3. Facilitated Cross-Border Operations: The harmonized regulatory framework and streamlined authorization process under MiCA facilitate cross-border operations for issuers and service providers within the EU, enabling smoother business expansion and market access.
  4. Reduced Legal Risks: Compliance with the TFR update and MiCA regulations helps mitigate legal risks associated with non-compliance, such as financial penalties, reputational damage, and potential legal disputes.


At Porat Group, we understand the complexities and challenges that arise from the evolving regulatory landscape in the cryptocurrency industry. With the recent approval of the Transfer of Funds Regulation (TFR) update and the Regulation on Markets in Crypto-Assets (MiCA) by the European Parliament, compliance has become paramount. Our team of experienced legal professionals is well-versed in the intricacies of these regulations and equipped to guide our clients through this dynamic environment. 

We offer tailored solutions that ensure our clients’ compliance with the TFR update and MiCA, mitigating legal risks and enhancing their credibility in the market. With our comprehensive knowledge and expertise, we assist clients in implementing robust customer due diligence measures, strengthening anti-money laundering frameworks, navigating authorization processes, and establishing investor protection mechanisms. 

By partnering with Porat Group, clients gain a competitive edge, enjoying the benefits of a secure and compliant approach to cryptocurrency operations within the European Union.