Thread
1/ End of June, the EU reached political agreements on MiCA & TFR, the most comprehensive crypto regulations to date in a major jurisdiction.
Since then many are wondering where they can find the final texts & when they will come into force.
An update thread on MiCA & TFR 👇
Since then many are wondering where they can find the final texts & when they will come into force.
An update thread on MiCA & TFR 👇
2/ First, here are my 2 summary threads of the political deals/decisions made incl. my main takes.
1. MiCA - the comprehensive framework for crypto-asset issuance (incl. stablecoins) & crypto-asset service providers (e.g. custody, brokerage, trading etc.)
1. MiCA - the comprehensive framework for crypto-asset issuance (incl. stablecoins) & crypto-asset service providers (e.g. custody, brokerage, trading etc.)
3/
2. TFR - the implementation of the FATF travel rule for crypto in the EU and the introduction of detailed AML requirements for CASPs (crypto-asset service providers) when transferring crypto, incl. to/from self-custody wallets.
2. TFR - the implementation of the FATF travel rule for crypto in the EU and the introduction of detailed AML requirements for CASPs (crypto-asset service providers) when transferring crypto, incl. to/from self-custody wallets.
4/ So what will happen now?
After the political agreements reached between the 3 major EU institutions (Commission, Council, Parliament) in the so-called "political trilogues", "technical trilogues" are tasked with transforming the political decisions into technical reg text.
After the political agreements reached between the 3 major EU institutions (Commission, Council, Parliament) in the so-called "political trilogues", "technical trilogues" are tasked with transforming the political decisions into technical reg text.
5/ These "technical trilogue" meetings are currently ongoing and led by a new Council Presidency, now the Czechs (previously the French - rotates every 6 months), and are mainly composed of technical delegates from the 3 institutions.
6/ Due to the August summer break in Brussels, it could take until the end of September/sometime in October until a final regulatory text is formulated and finalized.
These texts will still not be public but are normally leaked and should circulate at some point.
These texts will still not be public but are normally leaked and should circulate at some point.
7/ Afterward, the final texts will be voted once more - a pure formality at this point - in the Parliament's ECON committee, the Council, and finally in the Parliament's plenary.
Based on similar financial legislation, this could happen between Dec 22 - Jan 23.
Based on similar financial legislation, this could happen between Dec 22 - Jan 23.
8/ TFR is way shorter & might be voted through earlier, tbd.
Once voted in the plenary, the regulations will be published in the “Official Journal of the European Union” & enter into force on the twentieth day following that.
This is when the texts will be finally fully public.
Once voted in the plenary, the regulations will be published in the “Official Journal of the European Union” & enter into force on the twentieth day following that.
This is when the texts will be finally fully public.
9/ However, there are significant transitional phases before the regulations actually apply to the crypto industry.
• 12 months for stablecoins
• 18 months for all other MiCA provisions
• TFR provisions apply as soon as MiCA applies
So by Q3 2024 all rules should apply.
• 12 months for stablecoins
• 18 months for all other MiCA provisions
• TFR provisions apply as soon as MiCA applies
So by Q3 2024 all rules should apply.
10/ But there might be delays in the schedule & it is not uncommon that these transitional phases are extended.
This could esp. be true if the EU supervisors EBA & ESMA take longer than expected to publish the exact technical reg. standards (e.g. HQLAs for stablecoin reserves).
This could esp. be true if the EU supervisors EBA & ESMA take longer than expected to publish the exact technical reg. standards (e.g. HQLAs for stablecoin reserves).
11/ As you can see, even once in force, the work is never really finished.
The exact technical standards & guidelines developed by EBA/ESMA in the 12 months after entry into force will be critical, and active industry participation & policy work will be key here.
The exact technical standards & guidelines developed by EBA/ESMA in the 12 months after entry into force will be critical, and active industry participation & policy work will be key here.
12/ Plus, there are plenty of review clauses within MiCA & TFR, meaning that plenty of topics (sustainability, "unhosted" wallets etc.) will be reviewed & reassessed in the 1-3 years after entry into force.
Additional specific measures might be introduced if deemed necessary.
Additional specific measures might be introduced if deemed necessary.
13/ Hence, the policy work around these EU regulations is far from over and many of their real-world consequences will only be assessable after their entry into force and the creation of supervisory standards.
14/ Apart from MiCA & TFR, the EU is currently working on several initiatives with high implications for the crypto space (AMLR, DeFi report, DeFi supervision pilot, NFT report, Digital Euro legislation etc.) that probably deserve a separate thread.
15/ Quite evidently, the EU is pursuing its outspoken goal of being a regulatory pioneer with respect to crypto.
Something that is starting to concern US regulators and might push them to act faster.
Something that is starting to concern US regulators and might push them to act faster.
16/ I hope this thread helps with understanding the timeline around MiCA & TFR & the final stages of EU legislation more generally.
TLDR:
1. We will have to be patient a little longer and
2. Policy work on these matters will continue to be crucial
Feel free to share :)
/END
TLDR:
1. We will have to be patient a little longer and
2. Policy work on these matters will continue to be crucial
Feel free to share :)
/END
