The Banking Executive Magazine - May Issue

attention to the Environmental, So- cial, and Governance (ESG) consid- erations in MiCA regulatory framework and highlights the chal- lenges posed by MiCA. The article concludes with the industry implica- tions of the Markets in cryptoassets regulation and the road ahead for Arab banks to prepare for MiCA im- plementation and develop a pan Arab cryptoasset regulatory frame- work that can interoperate with MiCA and that is adapted to the needs of the Arab region. OVERVIEW OF MICA The European Commission intro- duced the Markets in Crypto-Assets (MiCA) regulation as part of its digital finance regulatory framework. MiCA is a pioneering legislative framework for regulating crypto markets. It un- doubtedly places the European Union (EU) as a global pace-setter. Crypto markets are multi-jurisdic- tional. Regulatory efforts similar to MiCA would contribute to the cre- ation of a safe, robust and necessary ecosystem for cryptoasset markets globally. The Markets in Cryptoassets regula- tion focuses on certain categories of crypto-assets which are currently out of scope of existing regulations. It also establishes a legal framework for crypto-asset services providers as well as consumer protection. MiCA will apply directly across the European Union (EU) without any need for national implementation laws. This will ensure consumer pro- tection and an effective and har- monised access to the innovative crypto-asset markets across the single market. MiCA Objectives The Markets in Cryptoassets regula- tion has four essential objectives: • Ensuring legal certainty by estab- lishing a sound legal framework for crypto-assets in its scope that are not covered by existing financial services legislation; • Supporting innovation and fair competition to promote the devel- opment of crypto-assets by institut- ing a safe and proportionate framework; • Protecting consumers, investors and market integrity in considera- tion of the risks associated with crypto-assets; • Ensuring financial stability, with the inclusion of safeguards to ad- dress potential risks to financial stability. MiCA Scope A majority of cryptoassets which are not already governed by other regu- lations, such as security tokens and central bank digital currencies, fall into the scope of MiCA. These in- clude: • E-money tokens • Asset-referenced tokens • Utility tokens • Crypto-assets, other than e-money tokens or asset-referenced tokens, offered to the public are also in scope of the regulation, underlin- ing the objective to have a broad scope. MICA ISSUE 173 MAY 2023 the BANKING EXECUTIVE 9