- EU countries can use local rules to attract cryptocurrency projects.
- Some countries are ahead of others as MiCA approaches.
- The December deadline may be extended under certain circumstances.
With the EU cryptocurrency rulebook approaching its implementation date, regulators and cryptocurrency companies are running out of time to plan for this game-changing regime.
In less than 12 months, the Markets in Cryptoassets Regulation, or MiCA, will allow cryptocurrency companies to apply for a license in one of the EU member states and gain access to the rest.
This means that cryptocurrency platforms can instantly do business across the $19 trillion EU market.
But with this opportunity comes a big question: Which country should a cryptocurrency company locate in?
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Attract crypto companies
Coming up with answers is complicated because national regulators are free to customize their own rules under MiCA, and many are designing ways to attract cryptocurrency companies.
“If a country already has experience in dealing with one specific type of services, it makes a lot of sense that it will continue to attract those services,” said Elizaveta Palaznik, independent specialist consultant at MiCA. DL News In a live interview.
Luxembourg, for example, is already attractive to investment funds, Palaznik said. The Grand Duchy, which borders France and Germany, hosts 3,600 investment funds, so cryptocurrency funds are flocking there as well.
Ireland plan
Irish regulators are known to be friendly to big tech and digital finance companies. That's why companies like Coinbase and Ripple have chosen to base themselves in Dublin ahead of MiCA, which begins at the end of this year.
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Palaznik pointed out that France has attracted trading platforms and exchanges. Malta has attracted web3 gaming platforms.
In fact, France and Malta have already installed systems similar to Mica. So companies registered there may now have fewer difficulties obtaining cryptocurrency licenses when MiCA is launched.
Passed into law last summer after years of negotiations among lawmakers, MiCA is considered the first comprehensive and detailed regulation of cryptocurrencies in a major jurisdiction. Regulators are preparing to implement the new laws in the coming months.
“Grandpa”
MiCA's cryptocurrency licensing system is scheduled to begin on December 30. However, there is a provision in the regulations that allows European countries to choose whether to give cryptocurrency companies an additional period of up to 18 months to adapt. This period is known as the “grandfather” period.
Businesses already registered with the regulator have an additional period in which they can offer their services locally and prepare for the new, more stringent licensing regime.
At the latest, cryptocurrency platforms will need to comply with MiCA by July 1, 2026, if the country opts for the full 18-month period.
“I have heard some rumors that the regulators in Luxembourg will move from 18 to 12 [months]Palasznik said, adding that Ireland and Austria had also opted for an additional 12-month transition period.
However, Lithuania will not provide any additional transition time to cryptocurrency companies. Lithuanian authorities said in December that they were tightening requirements for cryptocurrencies “in order to manage risks.”
The European Securities and Markets Authority, which oversees the implementation of MiCA, in October urged national authorities to reduce the grandfathering period to 12 months.
“Some regulators, as far as I know, of course really want to make the December 30 deadline specific to cryptocurrency companies,” Palaznik said. “So companies already know what they need to do.”
Watch the full conversation between DL News'Regulatory correspondent Inbar Press and Elizaveta Palaznik here:
