The Banking Executive Magazine - May Issue

MICA by introducing four regulatory sub- sets for significant or non-significant e-money token issuers, depending on whether the issuer is a bank or an electronic money institution (EMI). This unnecessary complexity reduces clarity and may lead to discrimina- tion. MiCA requires EMIs to safeguard at least 30% as bank deposits, poten- tially increasing financial instability, and securing commercial banks as intermediaries in payments. MiCA's safeguarding requirements make banks gatekeepers for their competitors and entrench unequal access to public resources of deposit facilities of central banks. MiCA puts harmful restrictions on EMT issuance in non-EU currencies, which will limit Europe's competitive advantage in Web3 and its ability to compete in the global currency mar- ket. IMPACT ON CRYPTO FIRMS MICA framework could help crypto firms get banked. MiCA regulation is set to open up more banking services to crypto firms, according to industry experts, as many banks are likely to be more willing to deal with licensed entities. But questions remain about implementation specifics and the crypto sub-sectors that are not cov- ered by the landmark legislation. Under MiCA, crypto asset services providers (CASPs) that seek to serve EU clients must gain licenses from national authorities. The previous lack of regulatory clarity around crypto had caused many banks to avoid dealing with such firms, leav- ing many in the sector unbanked. This positive shift should lead to a more transparent and secure indus- try, encouraging banks to reconsider their perception and become more receptive to offering accounts to li- censed crypto businesses. Banks will be able to take a much more proac- tive position on providing services to businesses that they understand are operating to a certain standard. The European Union EU’s measures differ from the United States (US) ap- proach, as the US Securities and Ex- change Commission SEC and other regulators have sought to regulate Coinbase, the Tron network, and oth- ers by enforcement. The more predictable regulatory en- vironment in the EU might make it difficult for crypto businesses in the US to operate and raise capital. MiCA’s regulatory clarity could draw many companies away from the US, bringing new jobs and investment to the EU. the BANKING EXECUTIVE 12 ISSUE 173 MAY 2023