CFTE met Ondřej Kovařík, a member of the European (EU) Parliament at the Point Zero Forum 2023 (PZF) at the end of June in Zurich. We got the chance to interview Ondřej about the European approach to Digital Assets regulation – MiCA.
Ondřej Kovařík was elected as a member of the Economic and Monetary Affairs Committee in the European Parliament and as a member of the political group for Europe, representing the Czech Republic in 2019. He previously worked at the Czech Ministry of Foreign Affairs, the Office of the Government, the Embassy of the Czech Republic in Ottawa, the Czech Ministry of Defence and the European Parliament.
What is Europe’s approach to Digital Assets in terms of regulation?
O: The European Union has adopted an approach with a very comprehensive regulatory framework called the MiCA (Markets in Crypto Assets Regulation). This is the main piece of legislation dedicated specifically to digital assets in the European Union (EU), which will be applicable across the 27 member states in a unified manner in the future. MiCA provides companies in the crypto industry with Ex-Ante (before the event) rules, enabling them to be aware of their obligations and crypto-related rights within the industry.
What is the latest milestone with MiCA that happened recently?
O: The latest news with MiCA is that it has been published and adopted in any Member States of the European. It will enter into application very soon, but since it is the beginning of the practical implementation of these rules, it acts as a set stone for the legislation in the crypto market. Both industries and the public authorities are starting to prepare for the application with accumulative improvements in the upcoming years.
“The most significant challenge with the MiCA implementation is the licensing procedure, which will serve as the initial major test for the effectiveness of the regulation.”Ondřej Kovařík, member of EU Parliament
Are there any potential challenges associated with MiCA’s?
O: The main challenge for MiCA is its successful implementation and enforcement across the EU. As it is a new piece of legislation, it requires significant effort not only from the companies to ensure compliance with the rules but also from public authorities for supervision and regulation.
Since many of these authorities are not familiar with the dimensions of the crypto industry, MiCA being the first legislation to cover crypto assets becomes particularly important. I believe the most significant challenge within the MiCA implementation is the licensing procedure, which will serve as the initial major test for the effectiveness of the regulation.
How do you see the integration of MiCA into the industry?
O: It will take some time before it gets fully materialised, even after implementation, its full application will be around 18 months from now, earliest by 2025. But the key with MiCA as a legal framework is that it remains stable and predictable since the rules are now written on paper. Still, they were never tested into practice within the industry and operators. There will be a period for MiCA to adapt throughout the development and new events.
I think this can be accommodated by the supervisory authorities when approaching the industries throughout the marker regime. So instead of changing the rules, I would see this as the adoption of the supervisory practice. If we are able to implement MiCA, it would fuel the international establishment of more regulation in the crypto market.
What’s next for and after MiCA?
O: MiCA includes the identification and definition of fundamental categories within the crypto sector, such as tokens and cryptoasset service providers. Since it only provides a general regulatory framework, more measures are expected to be developed in the future. For example, decentralised finance (DeFi) aspects such as NFTs, staking, and lending may be addressed with further regulations. Authorities like the EU Commission and supervisory bodies will examine these areas to assess the further actions required alongside MiCA, with an ongoing process of defining use cases.
Since we just finished the Point Zero Forum, are there any insights you want to share?
O: Through the panels and open discussions, I got to share insights and ideas about MiCA with various stakeholders from the crypto industry. I believe that these open dialogues with the industry and public authorities will ensure a shared understanding within the community and enable public authorities to stay updated on the latest trends and developments in the crypto sectors.
The potential impact of MiCA’s
In summary, Ondřej highlighted the significance of MiCA and some of the measures that may be developed in the future world of digital assets. As technology continues to advance, MiCA will be set as a significant step towards establishing more comprehensive and stable regulations within the crypto sector, such as tokens and crypto asset service providers, fostering a future financially inclusive economy.
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