The MiCA regulation

The MiCA Regulation, or Markets in Crypto-Assets, is a European Union regulation that aims to regulate crypto-asset markets. It was adopted by the European Parliament in April 2023, then approved by the Council of the European Union and finally published in the Official Journal of the European Union

The MiCA Regulation applies to all crypto-assets, including virtual currencies, non-fungible tokens (NFTs) and other digital assets. It covers the entire value chain of cryptoassets, from issuance to trading, custody and use.

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Objectives of the MiCA Regulation

The objectives of the MiCA Regulation are :

Protection of investors and consumers . The MiCA Regulation aims to protect investors and consumers from the risks associated with crypto-assets, including cyber-attacks, risks of fraud, market manipulation and money laundering.
Strengthening transparency and accountability . The MiCA Regulation aims to strengthen the transparency and accountability of participants in crypto-asset markets.
Increased innovation and competition . The MiCA Regulation aims to foster innovation and competition in crypto-asset markets.

Main provisions of the MiCA Regulation

The MiCA Regulation provides a series of provisions aimed at achieving its objectives. These provisions include in particular:

A clear definition of crypto-assets

The MiCA Regulation defines crypto-assets as digital assets that are not issued or guaranteed by a central bank or other public authority, and which are not necessarily pegged to legal tender.

An authorization requirement for crypto-asset service providers (PSCA)

PSCAs are the companies that provide services related to cryptoassets, such as trading, custody and portfolio management. PSCAs must be approved by a competent authority in the European Union.

Transparency and reporting requirements for PSCAs

PSCAs will have to publish information on their activities, risks and performance.

Preventive measures against money laundering and terrorist financing

PSCAs will have to put in place preventive measures against money laundering and terrorist financing.

Measures to combat cyber attacks and cyber threats

PSCAs must implement appropriate technical and organizational security measures to protect their systems and data.

Carry out security audits and pentests

The MiCA Regulation provides specific security requirements for crypto-asset service providers (PSCA). These requirements are designed to protect investors and consumers from the risks of cyberattacks, fraud and other illegal activities.

Security measures

PSCAs must implement appropriate technical and organizational security measures to protect their systems and data.

These measures must be designed to prevent security breaches, identify and respond quickly to security incidents, and limit the damage caused by a security breach.

Technical security measures

Technical security measures include:

The use of firewalls, intrusion detection systems and other IT security tools.
Use of encryption to protect sensitive data.
Regular updating of software and systems.

Organizational security measures

Organizational security measures include:

Implementation of a clear and concise security policy.
Staff safety training.
Implementation of a security risk management program.

Security Risk Management Program

PSCAs must also implement a security risk management program. This program must identify the security risks to which the PSCA is exposed, assess the level of risk and implement measures to reduce the risk.

The security risk management program must cover all aspects of the PSCA business, including IT systems, data, people and processes. It should be updated regularly to reflect changes in the security environment.

Security audits

The MiCA Regulation also provides specific requirements for security auditors of PSCAs. Auditors must be qualified and experienced cybersecurity professionals. They must have in-depth knowledge of MiCA requirements and security best practices.

Auditors must carry out regular audits of PSCAs to assess the compliance of their systems and data with the security requirements of the MiCA Regulation. The results of audits must be communicated to PSCAs and competent authorities.

Examples of implementing security requirements

Audits can help PSCAs identify and remediate security vulnerabilities

An audit can identify a vulnerability in a PSCA's security system that could be exploited by cybercriminals. The auditor may recommend measures to correct this vulnerability.

Audits can help PSCAs improve their security risk management processes

An audit may reveal that a PSCA's security risk management program is incomplete or ineffective. The auditor can recommend improvements to the program.

Audits can help PSCAs comply with MiCA security requirements

An audit may reveal that the PSCA does not comply with a specific requirement of the MiCA Regulation. The auditor may recommend measures to comply with this requirement.

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