Disclaimer: The opinions expressed in this article are solely those of the author and do not reflect the views of the editorial team at crypto.news.
The enactment of the Markets in Crypto-Assets Regulation (MiCA) in June 2023 marked a significant milestone for twenty-seven countries. While this legislation is crucial for a region that represents a substantial portion of the global economy, the implementation of MiCA is just the beginning of a transition period lasting twelve to eighteen months. The European Securities and Markets Authorities have highlighted the need for further development and refinement of a significant number of Level 2 and Level 3 measures outlined in MiCA.
In the year 2024, the European Union will move towards fully implementing MiCA, followed by collaborative efforts to enhance its international impact, including EU financial institutions seeking qualified sub-custodians. This will streamline the regulatory framework across EU jurisdictions, eliminating the need for separate licenses for crypto exchanges and firms in each country. However, unique characteristics of individual countries will still require careful navigation, such as addressing different KYC and AML requirements when operating across borders.
The year ahead will involve governments ironing out details, generating substantial paperwork, and engaging with various stakeholders. With the introduction of new processes under MiCA, there is no room for traditional approaches, as these sweeping crypto regulations are unprecedented globally. Adaptation and learning will be key for companies in 2024 to navigate the evolving landscape effectively.
The approval of spot Bitcoin ETFs is anticipated in the EU in 2024, starting with institutional investors and later extending to retail clients. The current bullish market trend increases the likelihood of swift approval for these financial products, driven by high trading volumes and the allure of potential profits. The seamless adoption of digital asset products among this crypto-savvy generation is expected to follow.
Following the implementation of MiCA regulations, customizations will likely enable broader access to financial opportunities. Bilateral agreements with the EU from smaller regions could facilitate increased trading volume and benefits that were previously out of reach. MiCA will also contribute to setting international standards for anti-money laundering and combating the financing of terrorism, aligning Europe with global regulatory norms.
With MiCA in place, every bank and registered asset manager in the EU can apply for a crypto custody license. However, many financial institutions may opt for sub-custodians to manage digital assets, as they may lack the technology and expertise required for custody services. Choosing a reputable custodian without internal exchange operations can provide additional security and segregation of functions.
As key stakeholders navigate the implementation of MiCA and its subsequent collaborations and customizations, decisions such as selecting sub-custodians will be crucial. The evolving regulatory landscape presents opportunities for growth and compliance within the crypto industry.
Sven Mohle, the managing Director of BitGo Europe GmbH, brings over 25 years of experience in financial services and sales. With a background in driving growth and overseeing operations, products, and cold storage, Sven has a proven track record in the industry. Prior to his role at BitGo, he played a key role in establishing Bloomberg as a leading player in the EMEA region. Sven holds certificates in Investments and FSA Financial Regulation from the Chartered Institute for Securities & Investments.