Opinion by: Julie Bourgeois, Director of Law and Compliance, 6 Monks
Digital asset regulations are rapidly evolving to ensure transparency and security for all market participants. This is more obvious than the emergence of two different regulatory models in Europe.
On the one hand, there is the EU market for crypto assets (MICA), which provides precise regulations for all 27 member states. On the other hand, Britain, after Brexit, it still has no common regulations like mica.
With it New The UK claims that the “Change Program” wants to be “the best place in the world of innovation” and is in place new laws to better protect people and support cryptocurrency growth.
For fund managers, these differences can become difficult problems. Should they agree with the legal certainty that the EU provides in line with mica? Or should they bet on the upcoming changes in the UK?
What can mica promise?
Mica has shed light on the issues regarding cryptocurrencies. Today, the regulation provides a comprehensive and, more importantly, a coordinated framework among all member states.
Perhaps the most important advantage of mica is passport Many companies have benefited from the mechanisms. Once the grandfather passes by, the competent national authorities provide a green light through a mica license, and crypto service providers can provide crypto assets services to any country in the EU. This is ideal for companies planning to expand their activities at the EU level – no longer a decentralized regulation.
The positive impact of mica, especially during the business expansion phase, can be seen in the region. Previously, launching in another EU country meant relegalization and several months of approval. Now, you have approved CASP status in one country, which means you operate legally throughout the EU. This saves tens of thousands of euros and months of work.
The UK’s Agile Method
Throughout the channel, there is UK, which has a more adaptable but decentralized approach. So far, the UK has no unified law similar to mica, but it has a bold vision of integrating cryptocurrencies into existing systems.
The UK’s draft crypto legislation is part of its “change plan” that promises to create laws to ensure greater transparency. For the first time, official laws were formulated, not only to recommend, to regulate the UK crypto industry.
The country’s main goal is to protect crypto users by establishing clear risk disclosure laws when purchasing crypto assets and precise terms of service. Considering encryption can Promote These new regulations could greatly affect the crypto environment in the UK.
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Despite the stricter regulations, it leaves room for innovation. The UK is discussing the creation of a joint sandbox with the US, a regulated environment for testing new crypto products.
Crypto Fund Residence Decision
With these differences in mind, choosing where to set it can be a tough decision. Especially for crypto funds. This is not only a legal issue, but a strategic decision as they work closely with crypto asset service providers. What should they consider when making a choice?
Thanks to MICA as a unified law, EU CASPs can benefit from it Stable Compliance environment. The regulation creates a single licensing system for crypto asset service providers.
Mica provides certainty for today’s managers and custodians, which is especially important for institutional adoption. This predictability could become a significant competitive advantage for the EU and could expel more companies to their residence there. This is especially relevant to companies targeting cross-border expansion or institutional clients.
Luxembourg could be a potential place to establish funds within the EU. It has the highest financial center history and successfully creates and manages funds. Its clear rules and support for new ideas make it a smart choice to get crypto investment funds up and running under MICA.
Instead, the UK offers something more flexible and easier to develop. This attracted audiences, for example, the Fintech pioneers who are testing new highs. Since the UK is willing to try the aforementioned sandbox regulations, it may be an attractive for residence purposes.
Two paths with different intensities
The UK aims to bring cryptocurrencies into its traditional financial system. It is more open to new diversified products entering the market. That is, UK flexibility is an important advantage. If the UK can balance protections with certain investors in the near future, it could be a leading hub for Defi.
Meanwhile, EU mica regulations provide a consistent legal environment. With strong regulations, the EU positioned itself as a safe haven for crypto funds, and also introduced clarity to regulations and made the market more attractive.
Ultimately, it’s not a problem for one region to beat another. They are not competitors, but complement each other as they shape the future of digital assets.
Opinion by: Julie Bourgeois, head of law and compliance, 6 monks.
This article is for general information purposes and is not intended to be considered legal or investment advice. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or represent Cointelegraph’s views and opinions.
