In a recent interview, Vishal Sacheendran, Head of MENA and Europe at Binance, provided insights into the regulation of markets in Crypto Assets (MiCA) in Europe. Vishal, who previously worked with a financial regulator in Abu Dhabi, explained that MiCA is a comprehensive set of regulations for cryptocurrencies that treat them as financial services. He highlighted that MiCA brings uniformity in registration and anti-money laundering requirements to crypto-asset service providers across Europe, allowing passports to be issued to licensees across the region.
When asked about the impact of MiCA on Bitcoin specifically, Vishal stated that MiCA does not differentiate between different cryptocurrencies and treats them all equally. He stated that while MiCA is not the first regulatory framework in the world, it is the first in Europe and similar to what the UK is doing with its legislation.
Regarding the implications for companies operating as Crypto Asset Service Providers (CASPs), Vishal explained that they will be regulated based on the services they provide rather than the underlying asset class. “…cap requirements, mitigate risk, it all revolves around the services you do.” Different services such as custody, trading platforms and advice will have specific requirements and risk mitigation.
Vishal also mentioned that the MiCA regulation has different requirements based on the size of service providers. Large providers will have more capital and governance controls in place to ensure consumer protection. He noted that there is still more to come in terms of guidelines for marketing and processing stablecoins and NFTs, noting that “there will likely be separate tools developed for them in the future, but not yet.”
When asked about the regulatory environment in Europe compared to the US, Vishal emphasized that regulators often need time to catch up with innovation, and it is the power of innovation that drives the industry. He believes that crypto-friendly regulations in Europe are attracting companies, and he expects more players to set up shop in the region. “It’s only a matter of time before you see a lot of these new players and startups coming up with new, more innovative products or services,” Vishal stated.
Regarding the global impact of MiCA, Vishal suggested that other regions might adopt similar regulatory positions or incorporate aspects of MiCA into their own legislation. However, he noted that cultivating the talent pool within the industry is also crucial for its development.
For everyday cryptocurrency users, Vishal emphasized that they need to understand that industry companies are now treated as financial service providers under the MiCA. It also highlighted the importance of being able to issue passport licenses and serve the broader European market from a single centre.
Overall, the MiCA regulation in Europe aims to provide a comprehensive framework for regulating crypto assets as financial services, and to achieve standardization and consumer protection in the industry. While some aspects are still in development, the MiCA is set to become law by the end of next year, with potential implications for the global industry.