Thread
1/ End of June, the EU reached political agreements on MiCA & TFR, the most comprehensive crypto regulations to date in a major jurisdiction.

Since then many are wondering where they can find the final texts & when they will come into force.

An update thread on MiCA & TFR 👇
2/ First, here are my 2 summary threads of the political deals/decisions made incl. my main takes.

1. MiCA - the comprehensive framework for crypto-asset issuance (incl. stablecoins) & crypto-asset service providers (e.g. custody, brokerage, trading etc.)

3/
2. TFR - the implementation of the FATF travel rule for crypto in the EU and the introduction of detailed AML requirements for CASPs (crypto-asset service providers) when transferring crypto, incl. to/from self-custody wallets.

4/ So what will happen now?

After the political agreements reached between the 3 major EU institutions (Commission, Council, Parliament) in the so-called "political trilogues", "technical trilogues" are tasked with transforming the political decisions into technical reg text.
5/ These "technical trilogue" meetings are currently ongoing and led by a new Council Presidency, now the Czechs (previously the French - rotates every 6 months), and are mainly composed of technical delegates from the 3 institutions.
6/ Due to the August summer break in Brussels, it could take until the end of September/sometime in October until a final regulatory text is formulated and finalized.

These texts will still not be public but are normally leaked and should circulate at some point.
7/ Afterward, the final texts will be voted once more - a pure formality at this point - in the Parliament's ECON committee, the Council, and finally in the Parliament's plenary.

Based on similar financial legislation, this could happen between Dec 22 - Jan 23.
8/ TFR is way shorter & might be voted through earlier, tbd.

Once voted in the plenary, the regulations will be published in the “Official Journal of the European Union” & enter into force on the twentieth day following that.

This is when the texts will be finally fully public.
9/ However, there are significant transitional phases before the regulations actually apply to the crypto industry.

• 12 months for stablecoins
• 18 months for all other MiCA provisions
• TFR provisions apply as soon as MiCA applies

So by Q3 2024 all rules should apply.
10/ But there might be delays in the schedule & it is not uncommon that these transitional phases are extended.

This could esp. be true if the EU supervisors EBA & ESMA take longer than expected to publish the exact technical reg. standards (e.g. HQLAs for stablecoin reserves).
11/ As you can see, even once in force, the work is never really finished.

The exact technical standards & guidelines developed by EBA/ESMA in the 12 months after entry into force will be critical, and active industry participation & policy work will be key here.
12/ Plus, there are plenty of review clauses within MiCA & TFR, meaning that plenty of topics (sustainability, "unhosted" wallets etc.) will be reviewed & reassessed in the 1-3 years after entry into force.

Additional specific measures might be introduced if deemed necessary.
13/ Hence, the policy work around these EU regulations is far from over and many of their real-world consequences will only be assessable after their entry into force and the creation of supervisory standards.
14/ Apart from MiCA & TFR, the EU is currently working on several initiatives with high implications for the crypto space (AMLR, DeFi report, DeFi supervision pilot, NFT report, Digital Euro legislation etc.) that probably deserve a separate thread.
15/ Quite evidently, the EU is pursuing its outspoken goal of being a regulatory pioneer with respect to crypto.

Something that is starting to concern US regulators and might push them to act faster.

16/ I hope this thread helps with understanding the timeline around MiCA & TFR & the final stages of EU legislation more generally.

TLDR:
1. We will have to be patient a little longer and
2. Policy work on these matters will continue to be crucial

Feel free to share :)
/END

Mentions
See All