When the Markets in Crypto-Assets Regulation (MiCA) was signed into law in June 2023, a framework for twenty-seven countries was finally in place. Although this was a landmark piece of legislation for a region that represents nearly twenty percent of the global economy, MiCA is serving as the beginning of a twelve to eighteen-month process of transition, transformation, and customization. This is because MiCA includes a substantial number of Level 2 and Level 3 measures that still must be developed and refined, as noted by the European Securities and Markets Authorities.

In 2024, we’ll see the European Union transition into actually enacting MiCA, followed by collaborations and customizations to expand its international impact, including EU financial institutions seeking qualified sub-custodians. Ultimately, having one framework for all the jurisdictions in the EU will make it much easier for crypto exchanges and other firms, eliminating the need for a separate license in each country of the Union. However, individual countries will still have unique characteristics that must be navigated. For example, if a company is licensed to offer crypto services in Germany and wants to transact in France, France’s KYC and AML requirements still need to be separately addressed.

In the year ahead, governments will hash out details, create mounds of paperwork, and fill out forms among plenty of parties. With the new processes associated with MiCA, nobody can say, “Well, we’ve always done it that way before,” because there is no “before” when it comes to such sweeping crypto regulations anywhere in the world. Instead, plenty of learning will be on the ground, traversing the new processes as they unfold. The companies that proactively prepare in 2024 should experience a smoother pathway to enjoying the benefits inherent in MiCA.

It’s likely that spot Bitcoin ETFs will be made available in the EU sometime in 2024—first for institutions and, later, for retail purposes. The bull market makes it more likely that spot Bitcoin ETF applications and approvals will come to fruition sooner rather than later. After MiCA regulations are implemented and operational, we’ll likely see customizations that will allow more people to have a piece of the financial pie.

With the adoption of MiCA, Europe helps set the bar when contributing to international standards regarding rules and regulations around anti-money laundering and combating the financing of terrorism (AML/CFT). It’s unlikely that we’ll see fully standardized international regulations across the board, but it’s important for each region to provide clarity about its rules and processes to allow crypto businesses to feel comfortable about operating in the area and foster growth.

With the passage of MiCA, every bank and every registered asset manager in the EU can easily apply for a crypto custody license. Many financial institutions, like banks, may opt to use sub-custodians to manage their digital assets instead of taking on the added responsibility themselves. This strategic decision is just one of many that key stakeholders will need to make as they navigate the implementation of MiCA and its upcoming collaborations and customizations.

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