In the EU, the Markets in Crypto Assets (MiCA) legislation will soon impose new rules for any business that offers crypto services to its customers. Once the regulation into force in December 2024, crypto firms will have up to 18 months to comply with the new rules, with the designated financial regulator in each country setting the timeline for compliance.
In Ireland, an organization representing firms including PayPal, Revolut, and Ripple has petitioned the Department of Finance to enact the longest possible implementation timeline. Could these businesses be worried that they might not meet the deadline?
Under the MiCA regulation, any businesses that offer crypto asset services will need to be registered with a relevant EU authority. Firms can register as either a crypto asset service provider (CASP) or as a regulated financial institution.
Any businesses offering crypto asset services in the EU without the necessary permissions after the implementation deadline will be in breach of the law. Regulators could then move to restrict non-compliant businesses’ ability to serve customers. They could also impose fines or pursue further legal action if warranted.
For crypto firms with a large EU customer base, running against the MiCA rulebook could be catastrophic. And with the EU already looking toward the next wave of crypto regulation, the cost of non-compliance is only going to increase.
Although the deadline for MiCA compliance is still some way off, the consequences of running afoul of EU regulations have already been made clear.
For example, Binance’s EU business has taken a beating in recent months as, one by one, some of its most important payment partners have backed away from their dealings with the company.
In August, Checkout.com cut ties with the crypto exchange citing concerns over its anti-money laundering and compliance controls. Things only got worse for Binance when Paysafe unilaterally decided to stop processing EUR deposits and withdrawals for the firm, creating major challenges for EU customers.
The recent troubles faced by Binance give a taste of the kind of challenges crypto firms could face if they fail to comply with the new MiCA regulations in time. As such, it is perhaps unsurprising that some companies are lobbying for the maximum transition period.
In a letter to the Department of Finance, the Electronic Money Association (EMA) called on the regulator to extend the MiCA registration deadline to the full 18 months, giving firms until June 2026 to comply with the regulations.
Utilizing the maximum implementation period would “provide adequate time for both CASPs [crypto asset service providers] and the regulator to prepare for compliance with, and application of the new regime,” the EMA stated .
“This will promote uniform application of the rules, prevent regulatory arbitrage, and mitigate the potential for market disruption to the benefit of consumers, CASPs, and supervisors,” it added.
Although the EMA represents the interests of its members across the EU, its decision to lobby for an extended grace period in Ireland suggests that businesses based there face the biggest challenges when it comes to getting MiCA-ready.
That’s because Ireland is home to some of the largest FinTech and crypto firms operating in the EU. EMA members that run their EU business out of Ireland include OFX, PayPal, and Gemini.
Meanwhile, members such as Circle and crypto.com are headquartered elsewhere in the EU but still maintain offices in Dublin, setting up the possibility that they could use Ireland as their MiCA license base.
Although not affiliated with the EMA, major crypto firms, including Coinbase and Binance also maintain a presence in Ireland. The former has its EU headquarters in Dublin, while a number of Binance-owned companies are registered in Ireland.