Navigating the MiCA era: benefits and challenges

The European Union's Markets in Crypto-Assets regulation (MiCA) takes effect in 2024, establishing a new and unified regulatory framework for crypto-assets across all European Union Member States.

With MiCA, virtual asset providers can expect simplified cross-border operations and greater trust from banks and investors. Fulfilling MiCA requirements not only makes it easier to obtain banking services but also increases access to funding from venture capitalists and large investors.

Bringing a unified approach to Europe's fragmented regulatory landscape, MiCA addresses previous challenges where each country had its own set of rules, thus creating loopholes exploited by criminals.

Listen to Michal Gromek, a leading expert at OSCE Project on innovative policy solutions to mitigate money laundering risks of virtual assets, share his opinion on MiCA, the benefits the new regulation brings, and the challenges supervisors face. Michal Gromek visited Riga to conduct a seminar for experts from Latvijas Banka and the Financial Intelligence Service, and the bank seized the opportunity for a short talk.

MiCA simplifies cross-border operations for crypto-asset service providers

The MiCA regulation offers the possibility to launch a fintech company or virtual asset service provider in Riga, obtain a license locally in Latvia, and then operate in all the other countries that comply with the same regulation.

MiCA compliance – a trust stamp, easing banking relationships and boosting investor confidence

MiCA introduces new obligations for crypto-asset service providers, but it also transforms the landscape for these providers, easing banking relationships and boosting investor confidence. With clearer regulations, banks are more willing to provide accounts to these businesses, previously deemed high-risk. Additionally, ensuring MiCA compliance equals a trust stamp, enhancing access to funding from venture capitalists and large investors.

Virtual asset service providers are responsible for the transactions on their platform

MiCA requires virtual asset service providers to be responsible for the transactions occurring on their platform. MiCA is like a pan-European regulation for a driver's license designed for crypto-asset service providers in order to meet a common standard.

Law enforcement authorities capable of tracing the use of cryptocurrency in illicit activities

Law enforcement authorities have the tools to trace and identify illicit cryptocurrency transactions, including those linked to terrorism, child abuse, and darknet activities. Recent advances have strengthened the capabilities to track these illegal activities and collaborate across states for a unified response.

Significant challenge for supervisory authorities

Illicit activities represent a small fraction of all crypto transactions. However, it is our societal responsibility to address these transactions and ensure that these loopholes are closed. The biggest challenge for supervisors and law enforcement authorities is thinking in silos, while criminal activities and technology operate globally, but regulations and responsibilities of supervisors often do not.

About Michal Gromek

Michal Gromek is an experienced virtual asset and fintech expert. Currently, he serves as a leading virtual asset expert on the OSCE project on mitigating money laundering risks of virtual assets and cryptocurrencies and as a virtual asset expert within the UNODS (United Nations Office on Drugs and Crime) Global Programme on Cybercrime.

He co-chairs the Digital Asset Task Force of the Global Coalition to Fight Financial Crime. This expert group includes members from Europol, Refinitiv, and the World Economic Forum. Previously, he initiated and coordinated the Working Group on Digital Assets & Blockchain for the Swedish Fintech Association.

Additionally, he has served as the Chief Compliance Officer at Safello, the leading Digital Currency Brokerage Platform in the Nordics, and contributed his knowledge in fintech and decentralised finance to Forbes.

Michal Gromek's expertise lies in decentralised finance and combating web3 financial crime. His mission is to share knowledge and address challenges within fintech.

This spring, Michal Gromek held seminars in Riga for experts from Latvijas Banka and the Financial Intelligence Service on the basic principles and typologies of crypto-asset service providers, as well as on frameworks for monitoring anti-money laundering and countering the financing of terrorism and proliferation.

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