Nine years ago, during the Revolution of Dignity, Ukraine chose its future within the European Union and On June 23, 2022, the leaders of the 27 EU member countries made a historic decision to grant Ukraine the status of a candidate for membership in the European Union, the first step towards the country’s joining the European family. These are two of the many steps Ukraine has taken to move closer to full-fledged EU membership. The Markets in Crypto-Assets Regulation (MiCA) is a significant step towards creating a harmonized framework for the regulation of crypto assets and related services within all 27 EU member states.
The implementation of MiCA will bring about multiple disclosure requirements and liabilities on crypto platforms and token issuers, covering authorization, supervision of transactions, capital requirements, professional qualifications of management, content of whitepapers, and marketing communications, among others. These requirements may be feasible for mature crypto players, but may create barriers for new crypto asset service providers (CASPs).
Ukraine, being the birthplace of numerous crypto startups, is unable to provide the same passporting rights to crypto companies because the country is not a full-fledged EU member. Stringent regulatory rules will limit competition in the Ukrainian crypto market, and only a minority of crypto players will be able to handle overly burdensome requirements and liabilities.
Excessive compliance measures may create barriers for new CASPs, and crypto exchanges will try to shift those excessive compliance costs onto consumers. Legal vacuum for crypto assets out of the scope of MiCA will also be an issue.
Ukraine would be wise to adopt only the most technically feasible provisions of the MiCA Regulation. This way, the country could avoid overly excessive regulation for its emerging crypto market, allowing companies to develop their business and gradually adapt to the new regulatory rules.