MiCA: FINDING BALANCE

Zonda CEO Przemyslaw Kral shares his thoughts on the Markets in Crypto Assets (MiCA) bill put forward by the EU Parliament, a new regulatory bill that could shake up the digital assets industry.

Zonda is a European-based cryptocurrency exchange that serves over 1 million registered users across several regions in both the EU and abroad. Founded in 2014, it’s one of the largest and longest-running cryptocurrency exchanges in Europe, and has recently gone through a significant upgrade and rebranding. The company now has its sights set on expanding even further into the global market and is enthusiastically working towards obtaining the necessary licenses to do so.

Currently, the exchange operates under full licensing and regulatory oversight by the FIU in Estonia and the OAM in Italy, allowing it to provide secure digital asset trading services to its customers.

MiCA is a proposal put forward by the EU Parliament to provide clear definitions and regulations for the use of crypto assets. The framework separates crypto assets into three distinct classes: asset-backed stablecoins, defined as “asset-referenced tokens” (ART), fiat-backed stablecoins, defined as “electronic money tokens” (EMT), and other crypto-assets, which are defined as “a digital representation of value that is not fiat money but is accepted as a means of exchange”.

One purpose of MiCA is to give consumers some level of protection against losses incurred when dealing with businesses that issue or provide crypto assets. Currently, consumers have very little recourse in the event of mismanagement by crypto providers but under MiCA, these providers will be held responsible for protecting consumer funds and liable in the event of losses.

In light of recent events in the crypto market, we can’t see how anyone would disagree that this is necessary and beneficial for the industry. It also provides additional protection against market manipulation and insider trading, and requires businesses to provide proof of reserves in the form of a 1/1 ratio of deposits. Overall, this will further legitimize the industry and undoubtedly attract muchneeded institutional investment into digital assets and blockchain technology.

What does this mean for crypto-asset issuers?

Any business that issues crypto-assets and falls under the scope of MiCA will likely be subject to all or more of the following obligations:

Authorisation to issue crypto-assets.

The publication of a whitepaper, similar to a traditional prospectus.

Compliance with certain rules when marketing crypto-assets.

To act honestly, fairly, and professionally in business dealings. Maintaining adequate security access protocols.

Zonda has always worked closely with regulators and is optimistic that should the new MiCA proposal be passed, it will help to improve the financial environment for consumers in the crypto assets sector. While some crypto service providers fight against stricter regulations, we prefer to find a careful balance between consumer safety and productive technological development.