In this lesson you will learn to:
- Describe what MiCA covers.
- Explain the purpose of AML rules and the travel rule.
- Explain why regulation focuses on service providers.
This lesson is a general overview for learning purposes. It is not legal advice, and rules differ by country and change over time.
Regulating a technology without an owner
A public blockchain has no head office. Regulators therefore focus on the points where people and companies meet the technology: businesses that issue tokens, hold assets for customers, or exchange crypto-assets for money. These are often called crypto-asset service providers (CASPs).
MiCA: the EU framework
The EU's Markets in Crypto-Assets Regulation (Regulation (EU) 2023/1114), known as MiCA, is one of the first comprehensive frameworks of its kind. Its rules for stablecoin issuers applied from June 2024, and the rest from 30 December 2024, with transitional periods for existing firms until July 2026 at the latest.
In outline, MiCA:
- requires issuers of most crypto-assets to publish a white paper with specified information and makes them responsible for its accuracy;
- sets strict rules for stablecoin issuers, including reserves and redemption rights;
- requires CASPs to be authorised by a national authority, with rules on governance, safekeeping of client assets, complaints handling and conflicts of interest;
- prohibits market abuse such as insider dealing and manipulation.
MiCA does not regulate the underlying technology itself, and purely educational content like this course is not a crypto-asset service.
Anti-money-laundering rules
AML rules require certain businesses to identify their customers ("know your customer"), monitor for suspicious activity and report it. International standards are set by the Financial Action Task Force (FATF), which extended its recommendations to virtual-asset service providers in 2019.
The travel rule
When banks send wire transfers, information about the sender and recipient travels with the payment. The travel rule applies the same idea to transfers handled by crypto-asset service providers. In the EU it is set out in Regulation (EU) 2023/1113, applicable from 30 December 2024.
Elsewhere
Other jurisdictions take different approaches. The UK brings certain crypto activities under its financial-promotion and anti-money-laundering rules and has been developing a broader regime. In the United States, responsibilities are divided among several agencies and the rules have been changing. Tax treatment also varies widely: in many countries, disposing of crypto-assets can have tax consequences, and a local tax adviser is the right person to ask.
Why regulation matters to learners
Knowing the basic framework helps you recognise warning signs: in the EU, a company offering crypto-asset services should be authorised, and national authorities publish registers and warning lists. Checking those official sources is a good habit for anyone, whatever they decide to do.
Key takeaways
- Regulation focuses on businesses that issue, hold or exchange crypto-assets.
- MiCA sets EU rules for issuers and authorised crypto-asset service providers.
- AML rules and the travel rule apply know-your-customer and transfer-information duties.
- Rules and tax treatment differ by country and keep changing.
Check yourself
Why do regulators focus on service providers rather than blockchains?
Because public blockchains have no central operator, while businesses are where people and companies meet the technology.
What does the travel rule require?
That information about the sender and recipient accompanies transfers handled by service providers.
Does MiCA regulate purely educational websites?
No. Education about the technology is not a crypto-asset service.
Sources
This lesson is for general education about how the technology works. It is not a recommendation to acquire, sell or hold any crypto-asset and is not financial advice.