The regulation of cryptocurrencies in the European Union, based on the Markets in Crypto Assets Regulation (MiCA), has come into effect and raised concerns about the rapid issuance of licenses in Malta.
Objectives of MiCA Regulation
The MiCA regulation, which came into force in December, requires crypto companies seeking to operate in the EU to obtain a license. This is aimed at protecting investors, preventing criminal activities, and ensuring stability and transparency among crypto firms.
Crypto companies are required to comply with strict anti-money laundering (AML) and know-your-customer (KYC) rules. They must also meet cybersecurity and risk management standards. These measures are intended to build trust in the market and keep bad actors out.
Malta as a Hub for Crypto Firms
Malta has become a popular destination for crypto companies seeking MiCA licenses. The country started accepting applications several months ahead of many other EU nations, allowing firms to prepare early.
Digital asset providers such as OKX have registered branches in Malta. Mark Jennings, Head of Europe at Gemini, stated that Malta’s early start allowed companies more time to build the teams and infrastructure needed to comply with MiCA. Some firms believe that the licensing process in Malta is smoother and faster compared to other parts of the EU, attracting even more new players to the market.
Issues with MiCA Compliance Across Countries
Marie-Anne Barbat-Layani, head of France’s Financial Markets Authority, expressed concerns that some nations might rush approvals, leading to uneven enforcement of MiCA rules. France is taking a more cautious approach, having issued only one MiCA license to date. While officials emphasize they won’t add extra national requirements, they remain committed to ensuring all companies meet core standards.
Stéphane Pontoizeau, another senior AMF official, noted the risk that crypto firms might seek registration in countries with easier licensing processes. The European Securities and Markets Authority is investigating whether some national regulators may be applying MiCA rules too leniently, but no specific countries have been named as of yet.
Although there is currently no evidence of rule breaking by Malta, existing concerns could lead to increased scrutiny over licenses and a decline in trust within the EU system. This, in turn, could slow the growth of the crypto industry and blockchain development in Europe.
