Research Study

MiCA

The EU’s Path to Digital Assets Regulation

by Stoyan Djourov

Lack of comprehensive regulation for digital assets has been a major obstacle for institutions that want to embrace the opportunities enabled by blockchain technology. As this new asset class has evolved rapidly over the last decade, driven by major advancements in the underlying technology, increased investor appetite, and real-world utility, regulators all over the world have started to lay the foundations for what will be an evolution of legislation.

In 2020, the European Union (EU) recognized the significance of digital assets and began drafting preliminary text for the “Markets in Crypto Assets” (MiCA) guidelines, with the aim of setting standards across the EU and bridging gaps in the existing financial services regulatory framework.

In this article, we discuss what MiCA is, why it’s needed, to whom it applies, what it covers, potential benefits, and more.

The information herein was prepared by Fidelity Digital Asset Services, LLC (“FDAS LLC”)and Fidelity Digital Assets, Ltd (“FDA LTD”). It is for informational purposes only and is not intended to constitute a recommendation, investment advice of any kind, or an offer or the solicitation of an offer to buy or sell securities or other assets. Please perform your own research and consult a qualified advisor to see if digital assets are an appropriate investment option.

Custody and trading of digital assets are provided by Fidelity Digital Asset Services, LLC, which is chartered as a limited purpose trust company by the New York State Department of Financial Services to engage in virtual currency business (NMLS ID 1773897). FDA LTD relies on FDAS LLC for these services. FDA LTD  is registered with the Financial Conduct Authority under the U.K.’s Money Laundering Regulations. The Financial Ombudsman Service and the Financial Services Compensation Scheme do not apply to the cryptoasset activities carried on by FDA LTD.

This information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Persons accessing this information are required to inform themselves about and observe such restrictions.

Digital assets are speculative and highly volatile, can become illiquid at any time, and are for investors with a high-risk tolerance. Investors in digital assets could lose the entire value of their investment.

To the extent this communication constitutes a financial promotion in the U.K., it is issued only to, or directed only at, persons who are: (i) investment professionals within the meaning of Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "FPO"); (ii) high net worth companies and certain other entities falling within Article 49 of the FPO; and (iii) any other persons to whom it may lawfully be communicated.

FDAS LLC and FDA LTD do not provide tax, legal, investment, or accounting advice. This material is not intended to provide, and should not be relied on, for tax, legal, or accounting advice. Tax laws and regulations are complex and subject to change. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Some of this information is forward-looking and is subject to change.

Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Digital Assets or its affiliates. Fidelity Digital Assets does not assume any duty to update any of the information.

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